There are potential real-estate investments of every type, from single-family residences to large commercial developments. What's right for you? Some investors are content buying and selling residential properties. There's plenty of diversification in that single field because we can specialize in foreclosures, fixer-uppers, multifamily projects, or other types of residences. Every other area of real estate offers just as much variety, so there's something for everyone. The trick is finding the segment of the real-estate market that you enjoy the most.

What's in Demand Close to Home?

Unless you live in a very small town, there are probably many real-estate investment avenues to pursue. The most important thing you can do is keep your mind open to all possibilities. Look at properties from a fresh perspective, visualizing what they could be with updates or simple changes rather than focusing on their current conditions.

Most properties that are for sale are listed with real-estate agencies, so the majority of buyers go to agents when they are in the market to buy. Experienced real-estate agents can be one of your best sources of information about what buyers and renters are looking for. Develop a relationship with one or more agents who specialize in the types of properties you want to buy.

Read all of your local papers, and pick up every real-estate for-sale publication that's available in your community. Pay close attention to ads, noting prices versus features for rental homes and properties listed for sale. Take regular drives through the communities you are most interested in. Your goal is to become familiar with every aspect of the real-estate market in your town.

Look at local demographics. Is your buyer pool made up primarily of one group of people, such as senior citizens? Knowing as much as you can about the population makeup will help you with any type of real-estate investment, from selling single-family homes to finding commercial tenants that specialize in businesses and services important to your town.

National and International Opportunities

If you can't find what you're looking for locally, branch out to other areas. There's never been a better time to shop nationally or internationally — the Internet brings distant real-estate opportunities to anyone who has a computer and a Web connection.

But before you branch out to other areas, it's important to become accustomed to your local real-estate market. Real-estate transactions are handled very differently across the United States. Worldwide, you'll see even more variations. Understanding your local process will give you more confidence and better prepare you to ask questions about the procedures in other areas.

One way to begin a real-estate investment career at a distant location is to buy a vacation home. How about an area where you like to spend a few weeks each year, or a location where you think you would like to retire? Chances are it's a spot you already know at least a little bit about, and that can be a plus when it's time to select properties.

If you have a child or grandchild away from home in college, consider buying a house or condo instead of paying rent for a dorm or apartment. The residence will fill a need during the young person's college years, and its value will appreciate for you. Make the time away from home an investment opportunity instead of paying rent for four or more years. Sell the home when your child leaves school, or continue to use it as a rental for other students.