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Over 6 million homes will be sold in the U.S. this year. If you're a real estate investor, how the hell are you supposed to sift through that monumental number to select those that are worth your time to pursue as investment properties? After all, time is precious. You don't want to waste your time looking at properties that may not be suited to your needs. While you're doing so, your next great deal may get scooped up by another investor. So, how do you select those great investment properties anyway?

Real estate investing can be a fantastic vehicle to build long term wealth, but you've got to select the right properties first. There are a large number of factors that can be used to describe every property. Age, location, condition, architecture, lot size, time for sale, seller flexibility, listed or private sale, square feet, number of bedrooms, number of bathrooms, amenities, etc. You need to be able to select those that are the most pertinent to obtaining properties as a real estate investment rather than one for some other purpose, such as as a personal residence.

What are those property descriptors are most effective when looking at properties as an investment? Take a look at these:

1 – Location – There's a good reason the old real estate adage exists; Location, Location, Location. It's because it's so very important. Location says a lot about the current and future worth of every property. Very often, the dirt is worth much more than the structure that sits on it, and yes, the location of that dirt is the deciding factor on it's ultimate value. Take two identical pieces of property; 1,100 square foot, 3 bedroom, 2 bath homes on 7,000 square foot lots. Such a home in San Francisco, 50 years old, not the best condition, with virtually zero amenities, goes for around $700,000. An identical home in East Memphis, TN, on a much larger lot, and in better condition, goes for less than $150,000.

Going at it from another angle, for half what you get the little shack in San Francisco for, you can live in a very nice 2 year old, 3,000 square foot home on a 10,000 square foot lot in Thomson's Station TN. You'll also get slab granite counter tops, an island kitchen, vaulted ceilings, crown molding, wainscoting, stainless steel appliances, and a three car garage. Oh, and you get 4 bedrooms and 4 bathrooms as well. See what a difference location makes. You can get fairly large value variations within the same area as well, but not those extremes.

2 – Seller Flexibility – One of the keys to getting a great deal on anything is seller flexibility. Real estate is no different. If the seller is motivated and needs to get rid of the property in a hurry, you'll typically be in a much better position to secure more advantageous terms, a better price, or both. If the seller doesn't have all that much motivation to sell, it will be that much harder to secure that deal you're looking for. The seller can be flexibility for a variety of reasons; they may be in a financial bind, have to relocate in a hurry, or not have the time or ability to manage a rental property. It's your job as an investor to determine why the seller is flexible, and incorporate this knowledge into your negotiation strategy. The better you get and use this knowledge, the greater your chances of making a great deal on the property. Factors such as time on the market and the seller's reason for selling can help you gage the motivation of the seller.

3 – Price – Ultimately, what you pay for the property will determine how great a value the purchase it is. It can be the best combination of factors, but if the price isn't right, you'll take a long time to turn a profit on your investment and your R.O.I. will suffer. One way you can cut through the crap is to come right out and ask what the seller's lowest cash price for the property is. Listen to what they tell you, and how they say it. You'll get even more clues to the real price they'll take for the property. Always listen. It's old knowledge that a good salesman or negotiator often gets more by listening than by talking. Seller flexibility, as noted in number 3 above, can be a large factor in setting the final price on the property.

4 – Condition - If the property is a total dump, you'll have to pour a ton of cash into it to make it useful. If the condition is factored into the price, fine. If not, walk away or use it as a bargaining tool. You may, in fact, be looking for properties that are in a poor state of repair. These are ripe for “sweat equity”, where you can increase the value of the property by investing some hard work. In addition, if you have the ability to get the work done for less than market value, it's a great way to increase the value of the property. Another point; the condition of the property is another indication of the seller's motivation. A property needing basic repairs, such as a leaking roof or bad water heater, can be a great indication of a seller that's in a financial bind.

These are four of the most important factors you can use when deciding which rental or investment  property to add to your portfolio. If you're just starting out, they'll give you a starting point from which to begin your investment property search.