What Kind Of Investment Properties Are Best?
By: Ravok Corp | Posted: 11th February 2008
An important part of learning how to invest in real estate is figuring out what kind of property to look for. There are a lot of options to choose from. The investor can purchase duplexes, condos, apartment buildings, or even houses - and that’s just the beginning. They can purchase lots and build on them or purchase lots and rent them outto renters who then build on them. They can make “in really good shape” a part of his/her search criteria, or he/she can search for something that seems to be in worse condition than it is, in order to negotiate a good deal. They can hunt for properties with absentee owners in the hope that they finds someone who’s hoping to put his/her property out of his/her mind because he/she really like to get rid of it.
There are lots of possibilities. The question is, which property is the right property for you?
But in the end, the right investment property is the one that will make the most money while costing the least amount to be rented out. Getting a property up to speed may involve rehabbing it to bring it up to code – installing up-to-date appliances and that sort of thing. It may involve a fresh coat of paint, or even getting rid of some unwanted tenants. What the potential new owner has to determine is, if the building's problems are fixable.
For example, in his book Ken McElroy in his book “The ABCs of Investing,” writes about someone who purchased a property without ever visiting the site, and found himself saddled with several tenants who were not just bad. These people were dangerous. The investment property was in a bad area of town in which the owner should never have purchased a property. When he finally got around to hiring McElroy's property management company, he had already lost a great deal of potential income because of delinquency.
McElroy's team fixed what they could. Got rid of the delinquent tenants and contracted for the building, but they could do nothing about the quality of the surrounding neighborhood. The property would never be one that people with other choices would want to inhabit, based simply on its location. This property would never command the rent that it could have if it had simply been located in another area. Most of the building's problems were just un-repairable.
The old saying, “Location, location, location” is important for a reason. Location may be the single biggest factor the real estate investor needs to think about when looking at potential investment properties.
Besides basic viability, the investor must think about how he/she wants to manage his/her investments. McElroy advises investors to contract a property management company for their expertise and to free the investor to look for additional investments, but some investors just like a more hands-on approach. That kind of person might want to think about buying property that’s little enough to manage on his/her own. Other investors are uncomfortable having partners or investors and will be restricted by that as well. When this is the case, smaller and less expensive is probably the way to go.
In the end, McElroy also advises that the investor not assume they should begin with a tiny property. If they have learned enough to buy investment property in the 1st, they can learn how to use other people's money. They should consider, however, what they are comfortable doing - or what they would consider the easiest way to move forward. The possibilities are almost infinite.
Alex Anderson is a licensed Minneapolis Realtor Who Helps Minnesota Real Estate Investors To Buy And Sell Property. Download A Free Copy Of "The Investors' Rental Guide" At http://www.GreatInvestmentProperty.com
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Tags: possibilities, money, good shape, investment property, investor, appliances, coat of paint, neighbor, condos, abcs, apartment buildings, property management company, delinquency, fresh coat of paint