1. From my real estate seminars, first you think what kind of market do you want and then look at the city. For example, do you have a family and are on a single income? You probably need something that is definitely safe and cash flows. So you would choose based on that. If your household income was high and could take a little negative cash flow, you could choose a high appreciation location.
Once you choose a city and do your research, I would recommend finding a real estate agent there who would have a list of properties for you to look at. I’m in a real estate investing network, so we have specific requirements for our agents, but generally they are well versed in investor real estate issues, and for the most part are real estate investors themselves. Anyways, peruse the choices, and sometimes one visit is all it takes, assuming you’ve done the research and the numbers are ok with you.
2. If you chose a good real estate agent who is also an investor, ask for three property managers that they can recommend (if they can’t recommend two, that’s a warning sign). A lot of these agents have property managers or are property managers themselves. Once you have a list, you will have to interview them and ask them specific questions on what services they are expected to give to you.
3. It all depends on what you have already, what your personal situation is, what your time frame is, and how your financial situation is structured.
If you have a house or investment property here in San Diego, it is probably cash flow negative (especially if you leverage). So you would probably go find a place that has good cash flow and low appreciation to offset that negative cash flow.
If you are close to retirement (within 10 years) you should probably get a high cash flow property that won’t see much appreciation because you need the income.
If you have a family, you will need something that does cash flow a little, but has good appreciation and growth potential.
If you’re single and have little to no obligations, you can buy a high appreciation and no cash flow property.
Ideally you should have a good mix of appreciation and cash flow properties. They should complement each other and minimize the risk. If at the end of your real estate venture, the properties are giving you good cash flow, certainly you could buy more properties and keep going. You can also upgrade and get bigger and better properties as time goes on. I do recommend using your cash flow to build up your cash positions in order to help you manage turbulent times. Also, if your cash flow is good enough, you can start maxing out your Roth IRA’s and 401k’s (which is also a good way to diversify your money).
Honestly I have not been investing in real estate for a long time. It is just that I have learned a lot with the seminars and books that I have been reading. While I did start renting out my previous residence in 2002, realistically I only started pushing my real estate investor potential about 2.5 years ago. However, my occupation does deal a lot with land and real estate, so I didn’t have as much to learn as most people. I used to have a real estate license in my previous location (Guam) but I just did it more as a lark as opposed to trying to make it my profession. Also I suck at sales…