Investment Properties - What's The Best Kind For You?

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A big part of learning how to invest in real estate is figuring out what type of investment property to look for. There are many choices. An investor can purchase duplexes, condos, apartment buildings, or even houses - and that is just the tip of the iceberg. They can purchase lots and build investment property or purchase lots and rent them to renters who then build on them. They can make “in very good condition” a part of their search criteria, or he/she can search for something that appears to be in worse condition than it actually is, in order to get a good price. They can go after properties with absentee owners in the hopes that he/she finds someone who’s trying to put their property out of their mind so that they can just be rid of it.

There are many possibilities. The question is, which property is the right property?

But in the end, the best investment property for you is the one that is going to make the most while not costing you an arm and a leg to get up to speed and run. Getting a property up to speed might involve rehabbing it to bring it up to code – adding up-to-date appliances and so on. It might involve a fresh coat of paint, or even getting rid of some unwanted tenants. What the potential new buyer has to determine is, if the building's problems can be repaired.

For instance, in his book “The ABCs of Investing,” Ken McElroy writes about someone who purchased a property without ever visiting the site, and found himself saddled with some tenants who who were bad and dangerous The property was in a bad area of the city in which the owner should never have invested in a property. When he finally got around to hiring McElroy's property management company, he had already lost a bunch of potential income due to delinquency.

McElroy's team repaired what they could. Got rid of the delinquent tenants and hired security for the building, but they couldn’t change the quality of the surrounding neighborhood. The property would never be one that renters with other choices would want to live it, based simply on its location. This property would never command the rent that it would have if it had simply been located somewhere else. Most of the building's issues were just un-repairable.

The old adage, “Location, location, location” is important for a reason. Your property’s Location might be the single most important factor the real estate investor needs to think about when searching for potential properties to invest in.

Besides simple viability, the investor must think about how he/she wants to go about handling their properties. McElroy recommends that investors hire a property management firm for their expertise and to free the investor to search for additional investments, but some people just prefer a more hands-on approach. That type of investor should think about purchasing property that is little enough for him/her to take care of on their own. Some people are unwilling working with investors or partners and so will be restricted by that as well. When this is the case, less expensive and smaller is probably the best option for them.

In the end, McElroy also advises that investors not assume he/she should begin with a tiny property. If they have learned enough to buy investment property in the 1st, he/she can learn how to work with other people's money. They should consider, however, what he/she is capable of - or what he/she would regard as the most enjoyable approach. The opportunities are almost infinite.

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