3 Unit in Great Area for More or Wait for a Deal?

[Kristen Witte]

I'm looking into making my first rental property investment and I've been thinking about two alternative routes that I'd love to get some input on. I live in the Hyde Park neighborhood in Chicago that houses the University of Chicago, where there are plenty of students, staff, and faculty migrating into the neighborhood every year. Just on the outskirts of this neighborhood are areas that are in the process of gentrifying. Currently I see two ways of thinking about what type of place to purchase: An investor could find a 3 unit (3bed/1 bath units) in Hyde Park for ~650k, with rents ~2000 per month for each unit. Alternatively, there are similar places in the outer neighborhoods for ~150k that will get you about ~1000 per month, but also need a decent amount of work. So if you had $200k cash that you were planning to use on this deal, would you rather put a down payment on the first place and get higher rents (but then also a mortgage) or buy the 2nd type of place in cash (with some extra funds to fix it up) and then get lower rents. Any type of discussion or opinions would be great!