How to Decide on an Investment Property

NEW YORK (TheStreet) -- What type of investment property should you buy -- a condo or single-family home?

Until recently, that was a trick question, as real estate was too risky and illiquid for most investors. But growing evidence of a rebound in the housing market reduces the risk your investment property would lose value. Rising prices also improve your chances of selling without too long a wait if being a landlord doesn't suit you.

On Tuesday, S&P Dow Jones Indices reported that its S&P/Case-Shiller Home price Indices showed home prices gained 7.3% nationwide last year. Various other surveys have showed gains, but the Case-Shiller gauge is widely viewed as one of the most definitive, and it's a very healthy gain.

"As of the fourth quarter of 2012, average home prices across the United States are back at their autumn 2003 levels," the firm said. That's a good-news/bad-news statement: good because the market's improving, but also a reminder of how bad things were.

Low mortgage rates make homes very affordable at today's prices, and investors have become very active in many markets. If you've already decided you can live with the hassles of being a landlord, what type of property is best -- a single family home or condo?

To a large extent, that will depend on the individual market. In communities such as the Florida coast, there may be many more condos than single-family homes. In suburbs and rural areas, single-family homes dominate.

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