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This paper proposes a residue method to find the optimal location of the FACTS controllers to damp out the inter-area mode of oscillations. Three types of FACTS controllers have been considered, which include static var compensator, thyristor-controlled series compensator and unified power flow controller. The residue method is base on the facts that it is the product of the modepsilas observability and controllability index of FACTS controllers to the critical mode. The placements of FACTS controllers have been obtained for the base case and placement base of loss sensitivity is also introduced. The effectiveness of the proposed method is demonstrated on two area 11 bus systems and New England 39-bus system.