Best Option for Rental Property

[Mustafa Asfar]

I'd like recommendations on what you look for when buying a property for rental. 

Do you prefer new construction or a used home?

Is school ratings a huge factor on the location?

What price point?

Does location really matter if price is reasonable? 

Thank you all in advance for your help.

[Evan Polaski]

@Mustafa Asfar you will get every opinion possible here.

I buy used homes.  New construction demands a premium that I am unwilling to pay.

Depends on your demographic. If you are buying a one bedroom house, no.  If you are buying a 3 or 4 bed, your tenants will likely have kids and school districts are a very strong factor in most people's decisions.  

Depends on rents in the area.  I am not going to pay 100k for a single family home that only achieves $500/mo in rent.  The consensus used to be the 2% rule for single families, now it seems like people are willing to go .75% rule.  But generally the more stable the property and better the area, the lower returns investors will accept.

Yes, location is the only thing you cannot replicate. Location will dictate the amount of rent you can get, the amount of appreciation you will see, the type of tenant you will get.  In Cincinnati, you can still find some properties for $30 or 40k, but you will get tenants that want to live in those areas too, and generally those tenants have no other options.  You want to be able to be selective with your tenants.