A big part of learning how to invest in real estate is figuring out what kind of property to go after. There are a lot of choices. An investor can purchase duplexes, condos, apartment buildings, or even houses - and that is just the tip of the iceberg. They can purchase lots and build on them or purchase lots and rent them outto people who build on them. They can make “in really good condition” a part of their search criteria, or he/she can look for a property that appears to be in worse shape than it actually is, in order to get a good deal. They can go after properties with absentee owners with the hope that he/she finds someone who’s trying to put their property out of their mind because they would really like to get rid of it.

There are many possibilities. Which property is the right property?

Ultimately, the best investment property is the one that is going to generate the most while costing the least amount to get up to speed and run. Getting a property ready to rent might involve rehabbing it to bring it up to code – adding up-to-date appliances and that sort of thing. It might involve a fresh coat of paint, or even getting rid of some irresponsible tenants. What the potential new buyer has to determine is, if the building's problems are fixable.

For instance, in his book “The ABCs of Investing,” Ken McElroy writes about someone who had bought a building without ever visiting the site, and found himself stuck with several tenants who who were bad and dangerous The property was in a poor area of the city where the owner never should have bought a property. When he finally got around to hiring McElroy's property management company, he had already lost a great deal of potential income due to delinquency.

McElroy's team repaired what they could. They got rid of the delinquent tenants and hired security for the building, but they could do nothing about the quality of the neighborhood. The building would never be one that people with a lot of choices would choose to live it, based simply on its location. This property would never command the rent that it could have if it just had been situated somewhere else. Most of the building's issues were simply 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 think about when checking out potential investment properties.

Aside from simple viability, an investor needs to think about how he/she wants to manage their investments. Mr. McElroy recommends that investors hire a property management firm for their experience and to free the investor to seek out additional investments, but some people simply prefer a more hands-on approach. This kind of person might want to think about purchasing something that is little enough for him/her to manage on their own. Other investors are unwilling working with partners or investors and will be limited by that as well. When this is the case, less expensive and smaller is usually the way to go.

In the end, Mr. McElroy also advises that the investor not assume that he/she should start small. If they have learned enough to buy investment property in the 1st, he/she can learn how to use other people's money. They should remember, however, what he/she is capable of - or what he/she would regard as the most enjoyable way to move forward. The opportunities are almost infinite.