What rental properties to buy

[Braeden Henry]

Is it smart to have higher end rental properties ($400k and up) or should I invest in lower end / middle class rental properties?

[Shera Gregory]

As with most things ... "it depends". Are you looking for immediate cash flow? Or are you OK with just covering costs for now and looking for more appreciation or to have a free-and-clear home at some point in the future (when you can really rake in the cash flow)? If you are looking for appreciation is that near term (3-5 years) or long-term? What are the average rents for each? In most markets a $400,000 house would have to bring in a pretty high monthly rent to cover not only the mortgage , taxes and insurance but also set-asides for future capital expenditures and annual repairs. Are you planning to manage the property yourself or use a property manager? If you are thinking of going the property manager route then check with a couple of local property managers to find out what is working well for their clients. I am personally investing in lower end homes because I can't reach my cash flow targets with the higher end homes. But that's just me.