What's The Right Kind Of Investment Property For You?
An important part of learning how to get started investing in real estate is figuring out what kind of investment property to look for. There are a lot of choices. An investor can buy houses, duplexes, condominiums or apartment buildings - and that is just the beginning. He/she can buy lots and build investment property or buy lots and rent them outto people who build on them. He/she can make ?in very good condition? a part of their search criteria, or he/she can search for a property that appears to be in rougher condition than it is, in order to get a good deal. He/she can go after owners who are facing foreclosure in the hope that he/she locates someone who?s hoping to put their property out of their mind because they would really like to be rid of it.
There are many possibilities. Which property is the right property for you?
But in the end, the best property for you is the one that will generate 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 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 are fixable.
For instance, in his book ?The ABCs of Investing,? Ken McElroy writes about a client who had bought a building without even viewing the site, and found himself stuck with several tenants who who were bad and dangerous The investment property was in a poor area of town where the owner never should have invested in a property. When he finally got around to contracting McElroy's property management company, he had already lost a bunch of potential rental income due to 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 couldn?t change the quality of the neighborhood. The building would never be one that renters with a lot of choices would want to live it, simply based on its location. This property would never get the rent that it could have if it had simply been situated somewhere else. Most of the building's problems were simply un-repairable.
The well known adage, ?Location, location, location? is very influential for a reason. Location might be the single most important factor the real estate investor needs to consider when checking out potential properties to invest in.
Aside from basic viability, the investor needs to consider how he/she wants to manage their investments. McElroy advises investors to hire a property management firm for their experience and to free the investor to seek out additional investments, but some owners simply prefer managing their property by themselves. That kind of investor might want to consider purchasing property that is small enough to take care of on their own. Some investors 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.
However, McElroy also recommends investors not assume he/she should start small. If they have learned enough to invest in the 1st, he/she can learn how to use other people's money. He/she should think about, however, what he/she is capable of - or what he/she would consider the most favorable approach. The opportunities are nearly endless.
Alex Anderson Is A Minneapolis Real Estate Agent That Helps Minnesota Real Estate Investors To Find Property. Download A Free Copy Of "The Investors' Rental Guide" At http://www.GreatInvestmentProperty.com
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