1. Look for early signs of urban renewal
Paying market value for a property makes it almost impossible to make a profit early on, so the first trick to finding great opportunities is to look for areas that are about to become more attractive. You need to know how to spot a neighborhood on the rise. One of the easiest and most reliable indicators of this is development. Look for areas that are the focus of fledgling urban-renewal projects, are attracting new businesses or restaurants, or simply have lots of construction going on.
2. Assess the area for lifestyle conveniences
Lifestyle conveniences play a huge role in the desirability of modern neighborhoods. The less time residents have to spend in their cars to get to work, school or the local shopping center, the more they’re generally willing to pay for properties in the area. To identify an area that fits this description, look for schools, parks, shopping centers and restaurants, as well as public transport facilities, easy highway access and good proximity to a business hub.
3. Search for undervalued properties
The only way to turn a profit from day one is to make sure your rental income covers all your expenses and more. To find an undervalued property, look for older houses or apartments of 15+ years. The best bargains are usually quite dated and poorly maintained, but won’t cost the earth to get into live-able shape.
4. Crunch the numbers
No matter how much potential a property seems to have, you have to crunch the numbers to know whether it could turn a profit from day one. As long as your projected rental yields compare favorably against your purchase price (plus additional expenses), you stand a good chance of having a profitable investment on your hands.