What target cash flow % should I go for on the first one?

[Karen M.]

Hi BPers -- I have a Friday question for you!

So, right, I have been hanging around here for a little more than a year now, on and off, getting my head straight on what we want for a rental property.

I am still working to establish criteria and firm up the vision.

Here is where I am at:

1.  We want a property that is close to home.  We will self-manage and I want to learn the business and management side. 

2.  We want a property that won't cost too much to get into.  However, we will likely want regular bank financing for the first one.  So target price range is $50,000 - $100,000 and our down payment / initial out of pocket costs would be $15,000 - $30,000 to get a first property.

3.  Property quality and neighborhood quality matters.  When I buy stocks, I am looking for appreciation and cash flow (I want and buy stocks / businesses that are basically solid, steady, reliable,  cash machines over the long haul. Many stocks throw off dividends and appreciate.)  I want basically the same from rentals.  They have to hold their value.  The neighborhoods have to be attractive long-term.  The homes need to be good homes.  Appreciation can be slow and steady, that is fine.  

So here is the question -- how much cash flow should I target for a first property?  Will I be successful if I get 1.5%?   Will that be pretty much a "sure thing"?   2% is a sure thing, yes?  I remember Brandon saying on a podcast that 1% is the bare minimum.  Do you agree with that?  

Where is your balance between cash flow and appreciation?   Do you calculate solely on cash flow?  

I am in the position where I need the first property to WORK.  It is important to be careful. If you were me, what cash flow percent would you look for?

Am I looking at the wrong metric?  

Right now, I am taking more time to brush up  and organize / automate our personal finances and build more cash cushion / safety net.  I love stock investing and that is still my first focus, but we will diversify into a rental.  I have paused looking at homes on Zillow until I get my financial goals super-clear.  Then I will try to get the neighborhood super-clear.

Thank you for any advice!