Real estate investment opportunities abound
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Rewards of buying "right"
Not every property will have what it takes to be a good revenue producer. To find the most promising prospects, it's critical to work with an agent who knows your target market well and who has a long record of experience with investment real estate.

"Without the assistance of a savvy, experienced professional, finding a good investment property is like going out into the investment world and picking stocks completely at random. That could wind up being a costly hit-or-miss proposition," says Jim Geracie, a real estate marketing and investment professional with Realty Executives Integrity in Brookfield, Wis. "You need someone who'll sit down with you, look at a potential investment property, and discuss its possible strengths and weaknesses in terms of valuation and revenue generation."

Jack McCabe of McCabe Research and Consulting in Deerfield Beach, Fla., says savvy investors can make tons of money if they buy right, which means that they have positive cash flow, some equity, ample liquidity" and they're not leveraging to try and buy these things."

"There's something about real estate that most real estate people by and large just do not get: debt equals risk," says the real estate analyst. "More debt equals more risk. So, I'd advise that individual investors approach this changed market with care."

Rental rates on the upswing
For those prepared to take the plunge, the good news is that rents continue to improve.

Last year, rental rates rose more than they had in recent years. "Overall, the increase was around 3.5 percent, and that's the highest rate of increase since the late 1990s," says Sheehan, who predicts that rent growth in the year ahead will likely move in line with or slightly above inflation.

Over the long term, the rental housing market looks set to benefit from changing demographics, too. In several years, for example, retiring and downsizing echo boomers (children of baby boomers) are expected to be in the market for rental units.

Investors who have a sufficient equity stake and who are able to hold on to their properties for a minimum of three years can also look forward to substantial gains in property values once supply and demand come back into equilibrium in the real estate market, says McCabe.

"Some of the markets that are going through major corrections right now are also going to be among the same ones that'll go through a big appreciation surge, once we get through this current cycle," he says. "And for the longer term real estate investors, there's going to be some incredible fortunes made."

Hands-off investing
Not everyone wants to be a landlord, a role that requires dealing with tenants and late-night phone calls about leaking pipes, backed up toilets and broken-down furnaces. For those who lack such mettle, other real estate investments exist.