It's wise to start small for your first few transactions so that you're not risking too much capital or taking on too much liability while you learn. Try for property that will appeal to the largest number of responsible prospective tenants. Avoid Land Forget about vacant land or building lots in resort areas. Land has to appreciate markedly before it pays off because it produces no income, ties up your money and requires tax payments. Judging which areas will be in demand in years to come takes skill and expertise, and even longtime investors can get burned.
Land is no investment for beginners.
This traditional technique runs into problems, however where local conditions change, employment drops and it becomes difficult to find tenants who will pay enough to cover those ten mortgage payments. You may end up supporting the real estate by taking money out of your pocket each month if you have enough money. An accountant can help analyze any purchase before you make it. You use annual figures, calculating first the gross rental income. With projected expenses subtracted from gross rental, you have the annual net operating income.