Want another rental- Would appreciate advice

[Steve Maye]

I have a single rental property and have had no issues.  I am looking to purchase my second, but would appreciate some advice.

For my first property I asked for advice from a property manager who recommended purchasing a new home in the area.  Great location, schools, etc.  No issues renting.  No renter issues.  No repairs.  I bought the home and hired the property manager to manage the property as I live out of state (long story).  Everything there has gone great for me, but I just don't know if the return is what it should be.  I paid cash for the home at ~$200K.  Using the REIPropertyAnalyzer spreadsheet I got:

Cashflow / Initial Investment = 7%

Cashflow / Assets= 7%

CAP Rate = 7%

Now I am nearing retirement and moving back to that area.  I want to purchase a second property.  This time I want to do my homework to understand if what I did was smart or if I need to change tactics to maximize my return.  I have again talked to the prop manager.  Another new home of similar cost is available.  Rent would be similar, but this one would have about $600 more in property taxes, thus reducing my returns.

Am I looking at the right types of properties to get the most back from my cash?  Or am I just choosing properties that make my life as a landlord easier?  Any advice would be appreciated.

[Paul Wurster]

What are your goals?  What kind of cashflow do you need?  

Figure out the return that you need and then go buy properties at prices that allow you to make that return.