When it comes to real estate property investments, single-family homes are likely the best choice for first-time property investors.

As perhaps the most widely available form of housing, the single-family home is most coveted by buyers and renters. As such, the investment is easier to finance, refinance, manage and liquidate, when compared with larger, multi-family property investments. But residential property investments require up-front cash, financial feeding, management and maintenance -- especially during the early years.

Unless your down payment is at least 25 percent or more, the rent you can charge usually won't begin providing positive cash flow for several years after your purchase.

Financing: Because the investment saps rental income, you can't use all of your rental income to qualify for investment property mortgages. The exact amount of rental income you can use to qualify depends on the lender, the property, your down payment, other financial obligations, outside income and other loan qualifying factors.

From the start, an investment property will cost you more to finance than an owner-occupied home, but you can cut costs by purchasing a condo instead of a single-family detached home, a fixer-upper or a foreclosure property. Also, consider financing through the seller, borrowing against your other investments or retirement funds, or other creative financing tools.

Don't expect to enjoy either income or appreciation, however, until after you've held the property for at least five to seven years.

Property with potential: To maximize your return, shop for investment property much in the way you'd buy your own home. Consider fixer-uppers that don't need major upgrades. Buy the cheapest home in the best block or buy into the cheapest neighborhood in the best community. Buy in areas where demand for housing will eventually exceed supply. And if possible, buy in a down market to later enjoy the equity-building benefits of an upturn.

Because you'll have to keep tabs on your property, it's wise to buy it within easy access of your own home.

Investment management: Unless you have the knack and the time to manage tenants and property, your costs will include hiring a property manager. Along with advertising vacancies, screening tenants and looking after maintenance, a property manager can also help you project how much you can charge for rent, make sure you perform required disclosures and fill you in on renters' and landlords' rights.

Taxes: As investment property, all expenses, including utilities, repairs, property taxes, mortgage interest, maintenance and condominium fees are income deductions that likely will produce a taxable loss, subject to the passive activity loss limitations. You can also deduct depreciation over 27.5 years.

Rather than net income from rental payments, most investment property owners hope to realize a return when they sell the property. How you sell determines how much, or how little income you'll realize once you pay taxes.

Generally, when investment property is sold outright, any long-term gain (on investments held longer than 12 months) is taxed at a capital gains tax rate that ranges from 10 percent to a maximum of 20 percent, depending upon your tax bracket. Capital losses are deductible from capital gains and, to a limited extent, other income.

If you choose an installment sale, you finance the purchase and any gain is realized and taxed over the loan's period. Also, you can conduct a tax deferred or tax free exchange. If you trade up to another more expensive investment property, taxes can be deferred. The trade can be tax free if you trade for another similar investment property.

Perhaps the largest tax savings are available to those who take advantage of the tax exemption designed for homeowners who live in their homes. You'd have to move into your rental property and convert it to your owner-occupied home for at least two years. When you sell, you'll benefit from the personal property tax exemption on $500,000 in capital gains for joint returns or $250,000 for single or separate returns.