Investment Properties - What's The Best Kind For You? by Alexandria Anderson
Part of learning how to get started investing in real estate is determining what kind of investment property to look for. There are many different options to choose from. An investor can buy duplexes, condos, apartment buildings, or even houses - and that's just the tip of the iceberg. They can buy lots and build on them or buy lots and rent them outto people who build on them. They can make "in really good shape" a part of their search criteria, or he/she can look for something that appears to be in worse condition than it actually is, in order to get a good deal. They can go after properties with absentee owners in the hope that they locates someone who's hoping to put their property out of their mind because they would really like to get rid of it.
There are many possibilities. The question is, which property is the right property?
But in the end, the right investment property is the one that will make the most money while not costing you an arm and a leg to be rented out. Getting a property up to speed might involve renovation to bring a building up to code - installing up-to-date appliances and so on. It might involve a new 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 can be repaired.
For example, in his book "The ABCs of Investing," Ken McElroy writes about someone who purchased a property without ever visiting the site, and found himself stuck with several tenants who who were bad and dangerous The investment property was in a bad area of the city where the owner should never have bought a property. When he finally got around to contracting McElroy's property management company, he had lost a great deal of potential rental income because of over due rental payments.
McElroy's team repaired as much as they could. They got rid of the delinquent tenants and contracted for the building, but they could do nothing about the quality of the neighborhood. The property would never be one that people with a lot of choices would choose to inhabit, based simply on its location. It would never command the rent that it could have if it just had been located in another area. Most of the building's problems were just un-repairable.
The old adage, "Location, location, location" is important for a reason. Location might be the single most important factor the real estate investor should consider when looking at potential investment properties.
Besides simple viability, an investor needs to consider how he/she wants to manage their investments. McElroy advises investors to hire a property management firm for the expertise and to free the investor to look for additional investments, but some people just like a more hands-on approach. This kind of investor might want to consider buying something that's little enough to manage on their own. Other people are uncomfortable working with partners or investors and so will be limited by that as well. In that case, smaller and less expensive is probably the way to go.
In the end, McElroy also recommends investors not assume that they should start small. If they have learned enough to invest in the first place, they can learn how to use other people's money. They should think about, however, what he/she is comfortable doing - or what they would regard as the most enjoyable way to move forward. The opportunities are almost infinite.
About the Author
Alex Anderson Is A Licensed Minnesota Real Estate Agent Who Helps People To Purchase Money-Making Minnesota Investment Properties. Get A Free Copy Of "The Investors' Rental Guide" At http://www.GreatInvestmentProperty.com
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