One question which often comes up with new real estate investors, is How to Find Cheap Rental Properties For Sale?
As for cheap, we don’t necessarily mean low-priced. In this case, think the dictionary definition of cheap, “(of an item for sale) low in price; worth more than its cost.” The strategy I’m going to outline is effective on homes at almost any price point depending on local rents. What really drives how you are going to spend your time on the MLS is estimated yearly rental income.
In some ways, this gives investors without access to an investor friendly agent or the MLS, a great way to pre-screen properties to find those which could be investment worthy.
How To Find Cheap Rental Properties For Sale On the MLS
When looking for acquisitions for real estate investing, the MLS is often considered a terrible place to look. I think this is unfortunate as the overwhelming majority or residential properties are bought and sold on the MLS.
So as a real estate investor I was always looking for the fastest way to scan on-market properties without having MLS access. There isn’t much I wanted to automate more than having to continually scroll the MLS to find properties for acquisition.
The strategy below is what I’ve found to be the best way to search the MLS and Zillow to find investment properties in as short a time as possible.
How To Quickly Finding Cheap Rental Properties For Sale
Unfortunately, there is a slight cost to this strategy. If you’re familiar with python or web scraping, then you could likely duplicate this strategy without the cost of a web scraper but if you’re like me and have no knowledge of how to do it – it’s just easier to find an app which can handle it.
I spent a number of hours messing around with code on Github and various blogs, but I found using the Scrape Hero service the fastest way to get up and running in minutes.
Scrape Hero bills themselves as, “The Easiest Way to Collect Data from the Internet. Download anything you see on the internet into spreadsheets within a few clicks using our ready-made web crawlers or a few lines of code using our APIs”
How To Find Cheap Rental Properties Online
Fortunately, for those of us looking to find properties on the MLS and Zillow, Scrape Hero offers a pre-built scraper for Zillow. Scrape Hero’s Zillow template is made to, “Scrape real estate data from Zillow to get property information such as Address, Broker Name, Price, Zestimate, and 10+ data points from the Zillow property listing page.”
Scrape Hero does offer several real estate scraping templates for the major real estate websites such as RedFin and Realtor.com but for investors, I found the Zillow one to be the best option as you need the rent estimate to make this work.
The Zillow template does require a paid subscription so this is going to cost you something. Currently their plans start at $5/month. Depending on the size of the area searched for investment properties, I often found myself using their $25 or $50 per month plan.
For the amount of time this strategy saved, it was definitely worth the money.
In order to go forward, you’ll need Scrape Hero up and running. Below is a sample of what the data will look like.
How To Find Cheap Rental Properties For Sale On Zillow
Once you have your first Scrape Hero file, you’re ready to get started. The data from Scrape Hero should include:
- Rent Zestimate
- Days on Zillow
- Listing Type (This can include For Sale by Owner)
- Property URL
- Broker Name
- Also whether it’s Zillow Owned
What we need to do is to use this data to help us quickly find the best investment properties on the market. The way we are going to do this is by getting an idea of the ratio of yearly rent to list price which gives us a way to judge the investment. (On my Google Sheet, I call the column Cap Rate though it really isn’t a true Cap Rate – It’s really an annualized rent estimate to list price.)
Once I have the Scrape Hero export open in Google Sheets, I create a column to the left of address called Cap Rate. Here the formula is going to be 12 times the Rent Zestimate divided by the list price. This gives you the ratio of estimated annual rent to your purchase price.
I then sort the sheet by “Cap Rate” and then start looking through the properties with the highest % Cap rate. You then only have to sort through the properties with the cap rates closest to your investment appetite.
If you’re a real estate investor using something like PropStream or have access to a local real estate agent, where you can get accurate data on ARV then it can definitely be worth it to add a column for ARV. This way you can also use the sheet to calculate an initial spread.