Utilizing A Top-Down Approach With Investment Properties

Use the Top-Down Approach to Identify Investment Properties

At HomeUnion®, we’ve seen positive results by using a top-down approach to identifying investment properties. This means starting from a wider net of identifying growing markets across the United States, then narrowing down to an ideal neighborhood, and then ultimately, down to a solid investment property.


Let’s go over this process in more detail:

Step 1: Identify Markets

You should start the process of finding investment properties by researching markets throughout the United States. The key is to look for favorable economic conditions. For instance, job growth and employment diversity plays a crucial role toward a market’s potential return and stability. Regions that are tied to one or two major industries or employers may seem stable and secure now, but all it takes is an industry shift or corporate headquarters moving to a different state to drastically change a local economy.

Strong job markets are one of the best indicators for a market as they draw in more workers to the area. When markets have a high median wage, it translates directly to high rental and occupancy rates. Ideally, the average wage should be three times the average rent.

Some public resources for you to find relevant data is:

Once you’ve completed your research and identified a market that shows growth now and in the future, you next need to narrow your search down to neighborhoods within that market.

Step 2: Identify Neighborhoods

The next step is to identify specific neighborhoods within the promising market you decided on in Step 1. This means looking at key factors that make neighborhoods highly desirable to renters, like close proximity to jobs, schools, restaurants, entertainment and other amenities.

Neighborhoods with good school districts are more desirable to potential renters.

Additionally, renters within these neighborhoods will be looking for other features that make it an ideal place to rent. Neighborhoods with good school districts and easy access to public transportation and/or major highways also make these places more desirable to potential renters. It’s important to think like a renter, since you want to avoid vacancy at all costs.

As you identify quality neighborhoods, you should also be looking for any potential negative factors that would deter people from wanting to live there.  Neighborhoods that are close to prisons, landing zones for an airport, or have potentially high crime rates are not very desirable. Rule of thumb, is that if you don’t want to live there, why would anybody else?

Once you identified renter-desirable neighborhoods, you will then need to find cash flow-proven investment properties within those neighborhoods.

Step 3: Identify a Solid Investment Property

The last step is to identify solid investment properties within those quality markets and neighborhoods you picked in the previous steps. You want to make sure that potential rental properties are structurally sound and require only a minimal amount of maintenance or rehab before a tenant can move in.

Overall, you also want to make sure that these properties are accurately priced for their current condition, future potential, and their value compared to the homes nearby. You can work with a local realtor and/or use comps as a resource.

Save Time & Work With a Partner You Can Trust

To properly complete each step and perform the thorough research that is needed, it could take you months of your own limited time, especially if you work full-time. Instead, why not leverage HomeUnion®’s platform to find solid investment properties within minutes? We’ve taken a unique data driven approach to finding some of the best investment properties throughout the country.

Our dedicated team of data scientists has created proprietary algorithms and models that allow us to search through massive amounts of data to find cash flow proven investment markets using the top-down approach. We even use a team of local real estate professionals to help us further vet and validate potential rental properties.

To gain access to these fully vetted investment properties, all you have to do is register for an account or login. Happy investing.

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