Biggest house in a small house neighborhood...

[Kari Atwood]

I'm looking at a house that is considerably larger than most of the other houses in the neighborhood.  The whole area is a total mixed bag--building years from 1959-1983 and square footage anywhere from 1000-1900. The house I'm considering was built in 1975 with 2900 sqft on a corner lot... In all the markets we've bought and sold houses, I've never quite seen that variety of building years and sizes in the same area before, so this is unfamiliar to me. The house needs some major cosmetic rehabbing--and seemingly more than most of the surrounding neighbors, so who knows about the unseen.  I'm in the internet trolling phase--I haven't asked for comps yet, but I will if it gets to the tour with a realtor phase. This is just the research and asking for wisdom while I'm shopping.

I've been told it's better to buy the smallest house in the neighborhood for investment purposes. I'm wondering how significant this is overall regarding resale, and whether I should adjust the MAO to be lower than 70% to accommodate the location--or expect a lower ROI at sale. Thoughts?