Investment Property - What Kind Should You Buy?

By Author: Alexandria Anderson
Total Articles: 46
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When you are deciding what parameters your target investment property should have, you shouldn't rely solely on what someone else says is important. You should use your own needs for determining what to look for. However, it may sometimes be useful to consider points that are also important to other investors.

For example, Ken McElroy, author of The ABCs of Real Estate Investing, prefers to buy slightly larger properties, so that they can pay for the hiring of a property manager. He prefers not to manage himself. It would probably be a waste of his time to do so anyway. By hiring a property manager, he is able to scout for even more investments, to make even more money.

Another thing that we all should consider is whether or not the property is going to require being rehabbed. McElroy refuses to consider properties past a certain age. Even if such a property were in good shape, which is doubtful, it will probably be lacking some amenities. You couldn't charge as much rent as with other properties. You will have to spend more money and time getting these properties up to speed. Why bother with rental units like ...
... that when, with just a little more concerted effort, you can find a property that needs less repairs and will bring a heftier rent?

Remember how important the location is when thinking about real estate. When deciding upon your market, always remember that most of people would rather buy than rent. Therefore, unless it is a lot more expensive to do so in a particular area, you will have trouble finding and keeping tenants.

McElroy also likes to look for out-of-state owners who own only 1 or 2 properties in a particular city. Quite often these owners do not keep their properties up to the level at which they could operate, because they initially underestimated the amount of time and effort it would take to nurture out-of-town investments. Sometimes these owners are very happy to sell as soon as possible.

No matter what kind of deal it looks as though you will be able to arrange on a given property, be careful you don't buy something at a good price if it is in a bad location. Remember that the only reason you are buying a property is to make money. If it is not going to generate income, then you are better off never buying it in the first place. It won't going to make money if it is in a dangerous neighborhood. It is not going to make money if it is in a community who don't have jobs. It won't be making money if it is in a place that is suffering an exodus. If there are no people, there are no prospective tenants.

These are some of the qualities that an investor should consider when looking at potential properties, but they will put you on the road to discovering what you really need in an investment property. Your focus is finding good opportunities that will make you money. Look for properties that are in good condition and well located. Make sure the properties are where the people are and where the people want to be. If you keep these things in mind, everything else will come together naturally.