A big part of learning to invest in real estate is figuring out what type of property to look for. There are many options. The investor can buy duplexes, condos, apartment buildings, or even houses, and that’s just the beginning. He can buy lots and build on them or buy lots and rent them to tenants who then build on them. You can make “in very good condition” part of your search criteria, or you can search for a property that appears to be in worse shape than it is, to negotiate a good deal. He/she may search for absentee properties in hopes of finding someone who wants to forget about her property so they can get rid of it.

There are many possibilities. The question is, which property is the right property for you?

Ultimately, the best investment property is the one that will earn you the most without breaking the bank to rent it out. Bringing a property up to date can mean bringing it up to code, adding updated appliances and that sort of thing. It may involve a fresh coat of paint or even getting rid of some unwanted tenants. What the potential new owner has to determine is whether the building’s problems can be fixed.

For example, in his book Ken McElroy in his book “The ABCs of Investing” he writes about someone who bought a property without visiting the site and came across some tenants who weren’t just bad. These people were dangerous. The building was in a poor part of town where the owner should never have bought property. By the time he decided to hire Ken’s property management company, he had already lost a lot of potential rental income due to delinquencies.

McElroy’s team fixed what they could. They got rid of the delinquent tenants and leased the building, but they couldn’t do anything about the quality of the neighborhood. The property would never be one that people with a lot of options would choose to live in, simply based on its location. This property would never get the rent it would if it had simply been located somewhere else. Most of the building’s problems were simply irreparable.

The well-known saying “Location, location, location” is important for a reason. Location may be the most important factor a real estate investor should think about when searching for potential investment properties.

In addition to simple feasibility, an investor needs to think about how they want to manage their investments. Mr. McElroy recommends that investors hire a property management firm for their expertise and to free the investor to pursue more investments, but some investors simply prefer a more hands-on approach. That type of investor might want to consider purchasing a property that is small enough to care for on their own. Other people are not willing to have investors or partners and therefore will be limited by that as well. When this is the case, the smallest and least expensive is probably the best option for them.

In the end, Mr. McElroy also advises investors not to assume they must start small. If he has learned enough to invest in the first place, he can learn to use OPM (other people’s money). However, he must think about what he is capable of doing, or what he would consider the most enjoyable approach. The opportunities are almost endless.