There is a lot of competition out there, with real estate investors doing wholesaling, fix & flip, ready-to-rent purchasing, and fix to hold for rental. There are plenty of ways to make money, various strategies, but the numbers always have to work. That's why you see prices rising for foreclosures and other properties of interest to investors.
There are certain factors that make a property a good investment depending on your chosen strategy. Since many of the fix & flip homes end up being bought by rental investors, a home in a good area with great rental potential is going to get some attention from just about every type of investor. If they don't want to hold it for rental, they want to fix & flip it to a rental investor.
If you want to concentrate on a niche strategy that enjoys less competition, there are some property types you can search out:
•Tiny home on a big lot.
•Severely damaged foreclosures requiring too much work to make the numbers work.
•Dysfunctional floor plan homes.
•Rezoning opportunities.
What you're looking for is a situation that isn't attractive to most investors employing the normal fix & flip or rental strategies. They see too much work, but more often they don't see the potential you do in the property.
An example could be zoning related. There are areas of cities that have been rezoned over time to R2 or R4, meaning 2 or 4 residential units per acre. They started out with one home per lot, and they still have this configuration, though zoning allows more units. This often happens in areas that have been incorporated into cities and are close to popular community amenities.
Finding a small single family home on a half-acre that's now zoned R4 could accommodate a duplex if it meets other requirements. If the home is in rough condition, maybe a foreclosure that's in need of a lot of repair, the numbers could look a lot better if you just tear it down. Building a new duplex on the lot could be a great rental property investment or be sold at a profit to a rental investor.
A small home, possibly with only one bedroom on a nice lot could be an add-on candidate. Adding one or more bedrooms and a bath could be a great strategy that others aren't considering, as they're in the "fix & flip" mode. Of course, you don't want to over-improve far above the neighborhood norm. Resale will be tough if it is significantly larger than the homes around it.
A small single story home could make a nice two-story rental if the area codes allow it and a floor can be added without major structural modifications. Or, converting the garage, or building a bedroom over the garage can be a smart investment move. If you build over a garage though, be sure to add materials in the floor of the bedroom that will keep the vehicle fumes from penetrating the room above.
One situation that isn't common but is out there is a home with tiny bedrooms but a lot of them. The home may have been built with four bedrooms, but they're small. There is no master bedroom. Taking out a wall and creating a large master can make the home a lot more attractive. Many investors will overlook this opportunity.
The same situation would apply with formal dining rooms off the kitchen. Today's buyers want larger kitchens with areas to entertain. Taking out the wall can change the whole feel and appeal of the home.
If these type of projects interest you, start looking harder at what nobody else wants. When other investors aren't interested, visit with an eye to bigger changes than just fixing stuff.