I often look at people who are slim and trim ... people who can speak another language...or people who seem to know so much about a particular subject. Then I realize, it is all slow but steady. Most of these people developed some kind of plan: eating and working out in a healthy manner; learning new vocabulary and verb conjugations; or studying a particular subject.
The same is true for that person who owns a 120 unit apartment complex. It's a plan. Generally it does not happen overnight. It requires homework. But advanced planning may make it a bit easier.
In a previous post, I talked about the power of a 1031 Tax Deferred Exchange combined with a good plan of action purchasing investment properties. Real estate can generate cash flow for your retirement. And with today's low interest rates and the numbers of properties on the market, the time is ripe to make a long term plan and begin to implement it for your future.
People often say they want an investment property which generates good cash flow. That's all they know. They have no philosophy of investing. As a potential investor, your first decision should be: What types of properties do you want to purchase? This may be determined by your price point.
"A" properties are those properties which are usually the most expensive; townhouses, condos, single or multi family homes in the most expensive areas of town. They generally command the highest rental prices.
"B" properties are mid priced properties; townhouses, condos, single and multi family homes in middle class neighborhoods.
"C" properties are properties in lower income neighborhoods, but managed properly, can be a solid investment.
There will always be people who are eager to rent in each type of property. In a down market, people may move from an "A" property into a "B" property, and people in a "B" property, may move to a "C" property to save money. Think about the area in which you live and where "A" properties, "B" properties, and "C" properties are located. Check the areas and the price points of these properties.
Condos, townhouses, and single family homes all present different investment strategies. Often these properties have association fees. What the fees cover and the management company is important. Some management companies do a far better job than others and surveying the area for deferred maintenance is important.
As an investor, do you want to maintain the grounds? How much are the association fees? Can you buy a different type of property without association fees and maintain the property yourself or hire a groundskeeper for less than the association fee? How much time do you want to devote to managing property? These are important questions for the potential investor to answer honestly.
I am a firm believer in purchasing properties in the same general area. When you drive by one property, you can drive by all. Problems arise when landlords do not know what is transpiring with their property. Seeing aluminum foil on the windows may tell you something other than the tenant is a day sleeper. Mileage and drive times are costs of owning property and it is important to check your asset on a regular basis.
Tomorrow: The power of a 1031 Tax Deferred Exchange
Resource: Qualified 1031 Tax Deferred Exchange Facilitator
http://www.leverageexchange.com/pdf_files/1031%20exchange%20info.pdf
Business Brokerage, Commercial Agent:
http://www.sonoitaproperties.com/
I posted this article this monring on my blog, http://www.terrybishop.com/blog
My new neighbor Jerry was out in his yard, and I was walking by, camera (as always) in hand. 
