What's The Best Type Of Investment Properties To Buy?

An important part of learning how to invest in real estate is determining what type of property to look for. There are many choices. An investor can purchase houses, duplexes, condominiums or apartment buildings - and that is just the tip of the iceberg. 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 very good condition” a part of his/her research criteria, or he/she can search for something that appears to be in rougher shape than it is, in order to negotiate a good deal. They can go after owners who are facing foreclosure with the hopes that they locates someone who is trying to put his/her property out of his/her mind because they would really like to get rid of it.

The possibilities are many. Which property is the right property?

Ultimately, 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 such. It might involve a new 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 are fixable.

For instance, in his book Ken McElroy in his book “The ABCs of Investing,” writes about someone who purchased a building without ever visiting the site, and found himself stuck with several tenants who were not just bad. These people were dangerous. The building was in a poor area of town in which the owner should never have invested in a property. By the time he got around to contracting Ken’s property management company, he had lost a bunch of potential rental income because of over due rental payments.

McElroy's team repaired as much as they could. Got rid of the undesirable tenants and hired security for the building, but they could do nothing about the quality of the neighborhood. The building would never be one that people with other choices would choose to inhabit, simply based on its location. It would never command the rent that it would have if it just had been located somewhere else. Most of the building's problems were simply un-repairable.

The old adage, “Location, location, location” is important for a reason. Your property’s Location might be the single biggest factor the real estate investor should consider when checking out potential properties to invest in.

Aside from simple viability, an investor must consider how he/she wants to go about handling his/her investments. McElroy recommends that investors contract a property management firm for their experience and to free the real estate investor to search for more investments, but some investors simply like managing their property by themselves. This type of investor might want to consider buying something that is small enough for him/her to take care of on his/her own. Other people are uncomfortable having investors or partners and so will be restricted by that as well. In that case, less expensive and smaller is probably the best option for them.

However, McElroy also advises that the investor not assume they should start small. If they have learned enough to buy investment property in the first place, they can learn how to use other people's money. They should remember, however, what he/she is comfortable doing - or what they would regard as the easiest way to move forward. The opportunities are, after all, nearly endless.

Alex Anderson Searches The Minnesota MLS listings To Find Moneymaking Minnesota Investment Real Estate. Get A Free Copy Of "The Investors' Rental Guide" At http://www.GreatInvestmentProperty.com