Magnetic nanoparticles (MNPs) are produced for both diagnosis and treatment due to their simultaneous availability in magnetic resonance imaging (MRI) and magnetic hyperthermia (MHT). Extensive investigations focus on developing MNPs for individual MHT or MRI applications, but the development of MNPs for theragnostic applications has received very little attention. In this study, through efficient examination of synthesis conditions such as metal precursors, reaction parameters, and solvent choices, we aimed to optimize MNP production for effective utilization for MHT and MRI simultaneously. MNPs were synthesized by thermal decomposition under 17 different conditions and deeply characterized by transmission electron microscopy (TEM), x-ray diffraction (XRD), and x-ray photoelectron spectroscopy (XPS). The heating efficiency of MNPs under an alternating current (AC) magnetic field was quantified, while MRI performance was evaluated through agar phantom experiments. Our findings highlight the crucial role of benzyl ether in metal ion reduction and size control. Metal-doped iron oxide MNPs displayed promise for MHT, whereas Mn-doped iron oxide MNPs exhibited enhanced MRI capabilities. Consequently, five engineered MNPs were considered potential candidates for further studies, demonstrating their dual ability in MRI and MHT.