If there has been a good time to buy an investment property in the last 10 or so years, it is probably now. There are many properties that would be suitable as investments, as a result of foreclosures and declining market values in general.
There are, however, things to know about in the current market that may have been less of a factor, even several years ago.
Getting financing is probably one of the most significant factors. Interest rates over time generally have been slightly higher for an investment property than for a house that the borrower had planned to live in. In light of the current credit crisis though, both Fannie Mae and Freddie Mac (FHA generally stays away from investment properties) have added premiums to their loans, which for the borrower are reflected in the rate.
These premiums are largely based on the amount that the borrower has as a down payment on the property. A borrower putting down 25% will pay a slightly lower rate than someone putting down 20%.
Lenders, knowing that renters, as anyone, can be unpredictable in their income stream, reward borrowers that have more of a vested interest in a property. First-time investors will generally need to put more down, as property management experience is a factor in determining the overall risk of borrowers.
Even with the challenges of financing it, owning an investment property and thinking of it as a long-term investment might make sense. The right property at the right price can generate a positive monthly income stream and appreciate over time, making it a great vehicle for retirement.
Keep in mind also that many expenses related to an investment property are tax deductible, affording investors benefits in that area.