Part of learning how to get started investing in real estate is determining what type of property to look for. There are many different options to choose from. The investor can purchase houses, duplexes, condominiums or apartment buildings - and that’s just the beginning. They can purchase lots and build on them or purchase lots and rent them to people who build on them. They can make “in really good condition” a part of his/her search criteria, or he/she can search for something that appears to be in rougher shape than it actually is, in order to get a good price. They can hunt for owners who are facing foreclosure with the hopes that he/she locates someone who’s trying to put his/her property out of his/her mind because they would really like to be rid of it.
There are lots of possibilities. Which property is the right property for you?
Ultimately, the right property for you is the one that is going to generate the most while costing the least amount to be rented out. Getting a property up to speed might involve rehabbing it to bring it up to code – installing up-to-date appliances and that sort of thing. It might involve a new coat of paint, or even evicting some undesirable tenants. What the potential new buyer has to determine is, if the building's problems can be repaired.
For instance, in his book “The ABCs of Investing,” Ken McElroy writes about a person who purchased a property without ever visiting the site, and found himself saddled with some tenants who who were bad and dangerous The building was in a poor part of town in which the owner should never have bought a property. When he finally got around to hiring Ken’s property management company, he had lost a bunch of potential income because of delinquency.
McElroy's team repaired as much as they could. They got rid of the undesirable tenants and hired security 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 want to live it, based simply on its location. This property would never get the rent that it would have if it just had been located somewhere else. Most of the building's issues were simply un-repairable.
The well known adage, “Location, location, location” is very influential for a reason. Location might be the single biggest factor the real estate investor needs to think about when looking at potential properties to invest in.
Aside from simple viability, an investor needs to think about how he/she wants to go about handling his/her properties. McElroy recommends that investors contract a property management company for their expertise and to free the real estate investor to seek out additional investments, but some owners simply prefer a more hands-on approach. That type of person might want to think about purchasing something that’s little enough for him/her to take care of on his/her own. Other people are uncomfortable working with investors or partners and so will be limited by that as well. When this is the case, smaller and less expensive is probably the way to go.
In the end, McElroy also recommends the investor not assume that he/she should start small. If they have learned enough to invest in the first place, he/she can learn how to work with other people's money. They should remember, however, what he/she is capable of - or what he/she would consider the easiest way to move forward. The possibilities are, after all, nearly endless.
Article Directory : http://www.articlecube.com
