Does "Buy less house than you can afford" apply to investments?

[Joseph Robele]

I am planning on buying a duplex in downtown Indianapolis to be a live-in landlord and have been looking at properties ranging from $150k-300k. I know that the benefits of buying a cheaper duplex is generally an increase in positive cashflow and ROI, since the more expensive ones here seem less likely to hit 1% rental income potential. However, should I be taking into account that the more expensive properties are near "hot" neighborhoods which could allow for the chance of greater appreciation in addition to any cashflow? Should I just be limiting my calculations to cashflow and cash on cash returns? I know if I choose a cheaper place, I would have to lower my standard of living, but I would be ok with that if it meant a great investment.

Additionally, as a first time buyer, I don't have a lot of capital, so I am wondering if the adage of buying less house than you can afford still applies to investment properties.

Appreciate any thoughts, advice, or experiences to share!

[Mike D'Arrigo]

@Joseph Robele It's just the opposite with investment properties. If it's an investment, you should buy the best asset class that you can afford. The better the asset class, the better your experience will be. You'll get better qualified, more stable tenants with a lot less hassle.