What makes a good starter investment property?

On Sunday I toured several properties with clients looking for a starter investment property. We looked at sites Downtown, Midtown, and Mid-Wilshire.

8 units or 6 units or 4 units all with good strong rent rolls that bring in a healthy revenue stream. 8 units with dilapidated conditions. 6 units in good condition in so so area. 4 units in a sweet area in clean condition.

All three have the potential to work. All three have pluses and minuses. The key is what will keep the revenue up best in a market where rents are sagging? Which one will a lender be more likely to give you better terms and easily fund. (Lending is very important today, more later) Which one will give the best appreciation down the road? And be easier to sell?

At some point one must move out of your starter property and roll into a bigger better apartment building. Hope is that the 1031 exchange will then produce real income for reaching your financial goals.

Keeping those goals in sight is important when weighing the questions above.

Keith L.

*hit Comments to weigh in on what is most important to you.
Revenue flow/lender marketability/manageability/appreciation/resale-ability