The Multiple Listing Service (MLS) is a powerful tool for real estate investors seeking to maximize their return on investment (ROI). With thousands of listings available, using the right filters can help you pinpoint the most profitable opportunities. However, the key to success lies in knowing which filters to apply to narrow your search and uncover the hidden gems that are likely to deliver the highest returns.
In this article, we’ll explore the best MLS filters to use when searching for high-ROI properties. Whether you’re flipping houses, purchasing rental properties, or looking for deals to wholesale, these filters can help you find the properties that fit your investment strategy.
Why MLS Filters Are Important for High-ROI Properties
MLS databases are full of data, and sifting through all the listings manually can be overwhelming. However, the right filters allow you to focus on properties with the potential for strong profits. The key filters you’ll use depend on your specific investment strategy and the type of returns you’re seeking. By leveraging these filters effectively, you can quickly identify properties that have the right characteristics for a high ROI.
1. Price Range Filters: Set Your Budget to Maximize Profitability
The price range filter is one of the most important tools in your MLS search. Setting a minimum and maximum price ensures that you stay within your budget while targeting properties that are undervalued or priced at a discount.
How to Use It:
- Min Price/Max Price: Choose a price range based on your available capital, financing ability, and investment goals. For example, if you’re targeting distressed properties for flipping, you might set a lower price range.
- Property Classifications: Many MLS systems allow you to filter by the property type, such as single-family homes, multi-family properties, or commercial buildings. Choose properties that match your investment strategy.
Why It’s Important:
- By targeting properties that fit within your budget, you can avoid overspending and ensure you have enough capital for renovations or other necessary investments. Additionally, finding undervalued properties in your budget range can result in higher profits when you sell or rent.
2. Days on Market (DOM): Identify Motivated Sellers
One of the most valuable filters for finding high-ROI properties is the “Days on Market” (DOM) filter. This filter shows how long a property has been listed, which can give you insight into the seller’s motivation. Properties that have been sitting on the market for a longer period may indicate a seller who is more motivated to negotiate a deal.
How to Use It:
- DOM Range: Set the DOM filter to find properties that have been on the market for 30, 60, 90 days, or more. Sellers of these properties might be more inclined to accept lower offers or offer concessions.
- Combine with Price Reductions: For even better results, look for properties that have experienced recent price reductions.
Why It’s Important:
- Sellers who have had their properties on the market for a long time may be motivated to sell quickly, providing an opportunity for you to negotiate a better deal and increase your ROI.
3. Property Type: Target the Right Assets for Your Strategy
Different property types offer different opportunities for high ROI. Whether you’re flipping, renting, or wholesaling, the property type filter allows you to focus your search on properties that align with your investment strategy.
How to Use It:
- Single-Family Homes: If you are looking for properties to flip or rent out as individual units, single-family homes can be an excellent choice.
- Multi-Family Properties: For rental income or long-term cash flow, multi-family properties often provide higher returns because of the ability to rent multiple units.
- Commercial Properties: Commercial properties may provide higher yields if you’re looking for long-term tenants with larger spaces, such as office buildings, retail, or industrial properties.
Why It’s Important:
- Different property types provide different profit opportunities. Multi-family units typically offer higher rental yields, while single-family homes might offer better opportunities for flipping. Selecting the right property type for your investment goals increases your chances of maximizing ROI.
4. Price Per Square Foot: Maximize Your Investment Potential
The price per square foot filter is especially useful when determining the value of a property relative to its size. This filter helps you find properties where the cost per square foot is lower than the market average, which could indicate an undervalued property with the potential for higher returns after renovation or improvements.
How to Use It:
- Price per Square Foot Range: Set a price range for properties based on average local market prices. For instance, if the average price per square foot for similar properties in the area is $150, and you find a property listed at $120 per square foot, it could be a deal worth considering.
- Use Comparables: You can also compare the price per square foot with similar properties to gauge whether the property is overpriced or underpriced.
Why It’s Important:
- A lower price per square foot means you’re getting more space for your money, which can lead to higher potential profits when selling or renting the property. In addition, by buying below market price, you’re setting yourself up for strong equity gains after renovation.
5. Condition of Property: Filter for Fixer-Uppers and Distressed Properties
Distressed or fixer-upper properties often offer the highest ROI, but they require careful evaluation. MLS systems allow you to filter properties based on their condition, helping you find homes that need work and are priced below market value.
How to Use It:
- Keywords: Search for listings that include keywords like “fixer-upper,” “handyman special,” “as-is,” or “needs work.”
- Condition Rating: Some MLS systems have a “condition” filter where you can choose properties that are listed as “poor” or “fair,” which are often the best deals for investors willing to do renovations.
Why It’s Important:
- Distressed properties are usually priced below market value, allowing you to add value through repairs and renovations. If you can accurately estimate renovation costs and manage the project efficiently, these properties can yield the highest ROI when flipped or rented out.
6. Foreclosures and Short Sales: Find Bargains for High ROI
Foreclosures and short sales are often listed at a significant discount, which can lead to substantial profits for investors. MLS systems allow you to filter for these types of properties, which are usually sold quickly and with more room for negotiation.
How to Use It:
- Foreclosures/Bank-Owned: Many MLS databases have specific filters for foreclosures or bank-owned properties. These properties are typically sold by the lender, and prices may be set below market value.
- Short Sales: Use the filter to find properties listed as short sales. These properties are typically priced lower due to the seller owing more than the property is worth.
Why It’s Important:
- Foreclosures and short sales offer deep discounts, often allowing you to purchase properties below their true market value. These types of deals are ideal for investors looking to flip properties quickly or hold onto them for long-term rental income.
7. Motivated Sellers: Look for Flexibility in Pricing
MLS listings sometimes include descriptions or tags that provide insight into the seller’s motivation. If a seller is eager to sell quickly due to personal or financial reasons, they may be more willing to negotiate on price or other terms, increasing your potential for high ROI.
How to Use It:
- Look for Motivated Sellers: Look for listings that mention reasons for selling, such as relocation, divorce, financial hardship, or job transfer. These sellers are often more flexible and willing to accept lower offers.
- Inquire About Seller’s Circumstances: You can also reach out directly to the listing agent to learn more about the seller’s motivation and whether they are open to negotiating terms.
Why It’s Important:
- Motivated sellers often present opportunities to purchase properties at a discount, giving you room to negotiate a deal that maximizes your ROI. Understanding the seller’s motivation helps you tailor your offer to their needs and secure the best price.
8. Neighborhood or Area Filters: Invest in High-Demand Locations
Location is one of the most significant factors influencing ROI. By using MLS to filter properties by specific neighborhoods, zip codes, or proximity to desirable amenities, you can target areas with strong demand and appreciation potential.
How to Use It:
- Location Filters: Use MLS location filters to search within specific neighborhoods or cities that are known for high demand, low crime rates, and strong appreciation trends.
- School Districts: Properties located in good school districts tend to hold their value better and have higher rental demand.
Why It’s Important:
- Investing in properties located in high-demand areas or up-and-coming neighborhoods can lead to faster appreciation and better long-term returns. These properties are also more likely to attract quality tenants if you plan to rent them out.
Conclusion
Mastering the best MLS filters is essential for identifying high-ROI properties in today’s competitive real estate market. By focusing on filters such as price range, property type, condition, days on the market, and location, you can find undervalued or distressed properties with strong profit potential. Additionally, leveraging foreclosures, short sales, and motivated sellers allows you to secure deals at a discount, providing more room for negotiation and higher returns.
Remember, finding high-ROI properties on the MLS requires both the right tools and the ability to assess each property’s potential. With these filters, you can streamline your search and zero in on the properties that are most likely to generate maximum returns.
