What Is The Best Kind Of Property To Invest In?

An important part of learning how to get started investing in real estate is figuring out what type of property to look for. There are many different options to choose from. The investor can buy houses, duplexes, condominiums or apartment buildings - and that’s just the tip of the iceberg. He/she can buy lots and build on them or buy lots and rent them to renters who then build on them. He/she can make “in very good shape” a part of their search criteria, or he/she can search for a property that appears to be in rougher condition than it actually is, in order to get a good deal. He/she can hunt for properties with absentee owners with the hopes that he/she locates someone who’s trying to put their property out of their mind so that they can just be rid of it.

There are lots of possibilities. Which property is the right property for you?

But in the end, the best investment property is the one that is going to make the most while costing the least amount to be rented out. Getting a property ready to rent might involve rehabbing it to bring it up to code – installing up-to-date appliances and so on. It might involve a fresh coat of paint, or even getting rid of some undesirable tenants. What the potential new owner has to determine is, if the building's problems can be repaired.

For example, in his book Ken McElroy in his book “The ABCs of Investing,” writes about a client who purchased a building without ever viewing the site, and found himself saddled with several tenants who who were bad and dangerous The building was in a bad area of town where the owner should never have bought a property. By the time he got around to hiring McElroy's property management company, he had lost a great deal of potential rental income due to over due rental payments.

McElroy's team repaired as much as they could. They got rid of the undesirable tenants and contracted for the building, but they could do nothing about the quality of the neighborhood. The building would never be one that renters with other choices would choose to live it, simply based on its location. It would never get the rent that it would have if it just had been situated somewhere else. Most of the building's problems were just unfixable.

The well known saying, “Location, location, location” is important for a reason. Location might be the single most important factor the real estate investor needs to consider when checking out potential investment properties.

Besides basic viability, an investor needs to consider how he/she wants to manage their investments. Mr. McElroy advises investors to contract a property management firm for the experience and to free the real estate investor to look for more investments, but some people just prefer managing their property by themselves. This type of person might want to consider buying something that’s small enough to take care of on their own. Some people are uncomfortable working with partners or investors and so will be limited by that as well. When this is the case, less expensive and smaller is probably the best option for them.

However, Mr. McElroy also advises that the investor not assume that he/she should begin with a tiny property. If he/she has learned enough to invest in the 1st, he/she can learn how to work with other people's money. He/she should think about, however, what he/she is capable of - or what he/she would regard as the most enjoyable approach. The opportunities are nearly endless.