Hi @Sarah Stelma, great question!
For my first property I went with more of a fully renovated "turn-key" property with the anticipation of less headaches and higher rent. While this was the case, I did buy it at more of a premium and there really wasn't any room to add value. This turned out to make it harder to reach the cash flow I had hoped for. The other issue was the property was so nice that it really only catered to a certain group of higher income individuals(Unrelated to renovation in general but something to keep in mind). This ultimately made renting it out harder, creating more vacancy (this was a few years back).
Ever since then I really took the latter approach that you mentioned and found much more success. While this might not be the case for everyone, I definitely now prefer it.
My opinion is that by seeking properties with room to improve, you are not only avoiding paying a premium of a fully renovated property, but you can add value creating more equity as you mentioned. This makes it easier to use that property to help buy the next in the future.
I like to invest in renter friendly areas that are either in emerging areas (new businesses coming or big town improvements), along the train lines or both ideally.
Hope this helps!