The American Education Institute

Unquestionably, unless you’re an expert in other areas of real estate and land development, you should be looking for your first investments toward income-producing properties.  These are properties that produce an ongoing flow of cash from rental income.  Whether that cash flow is positive or negative (a significant subject discussed at great length throughout my text entitled 100% Financing When Buying Real Estate) determines to a large extent whether your investment is a sound one, but rent-producing properties are always at least potentially profitable on a monthly basis.  In this, as you’ll see, income property is light-years ahead of vacant land. 

Some types of rent-producing properties are the following:

1.  Apartment Houses and Buidings

2.  Single-Family Rental Homes

3.  Multiple-Family Residential Properties

4.  Mobile Home Parks

5.  Office Buildings

6.  Wharehouses

7.  Industrial Space Buildings

8.  Post Office Buildings

9.  Retail Store Buildings

10. Shopping Centers

11. Restaurant Buildings and/or Food Courts

12. Hotels and Motels

13. Nursing Homes

It is likely that most people already know that apartment and office buildings are investor owned; but, ask yourself, how many people are aware that many of the stand-alone buildings occupied by restaurants, retail stores, hotels, motels, and even churches are actually owned by real estate investors?

You’re more likely to think, for example, that “Joe’s Fine Eatery” on Main Street is owned by Joe, right?  Well, it is just as likely that Joe leases the building’s space occupied by his restaurant from somebody else who actually owns the building.  Notice sometimes how a different restaurant may later occupy that same space.  Did the property change hands?  Maybe not.  Maybe all that happened was that the landlord got a difference tenant.  As you can see, the possibilities for owning property that generates income are quite vast.

Your best bet just starting out, however, is likely to be apartment buildings or small residential buildings like duplexes, co-operatives, or even single-family homes.  Condominiums are generally, but not always, like apartments; that is, they are usually comprised of smaller residential units situated in much larger buildings.  Nevertheless, you can still own condos and rent them to somebody else, provided this is allowed by the association that may manage the property.  Very often, condos and coops have their own rules, mutually agreed to by all residents of the property.  If you own the entire property, however, yo can generally make the rules.  Then a condition for buying a condo or co-op from you, of course, will require the purchaser to accept those rules.

Total Existing Home Sale Statistics prove and vividly illustrate just how plentiful such income-producers as single-family homes, condos, and coops really are in this country.  Because these types of residences are so readily available throughout the market place, you’ll be most likely to find more flexible sellers of these types of properties.

Some new real estate investors may in fact find that single-family homes make the best investments for themselves personally.  For one thing, these homes are generally lower in price than a big apartment or other types of rent-producing buildings.  For another thing, as most existing housing statistics in the United States prove, they are also more plentiful.

Dr. Eric T. Martin / 100% Financing When Buying Real Estate / 5-7-09