@Kate Cavanaugh, that's interesting that a new construction home will rent for 1.5% of the sales price.
Are you sure? Sometimes, I find that new clients get bad information on rental rates, either from a Realtor trying to close a deal or a neighbor who dramatically inflates the actual rental-rate.
In my experience, new construction is a poor play for a rental property. When you buy new construction you are always buying at "top of market".
If you buy new construction, at the top of the market, you will not see any significant appreciation for years to come. This is why I always advise my clients to look for homes in established neighborhoods, preferably without HOAs. Owning a rental property - in my opinion - is not about cashflow only. This is missing the forest for the trees.
Example: $500,000 new construction home near me rents for $3,000/month. Meanwhile, a $500,000 home in an established neighborhood rents for $2800/month.
The new construction home makes $200/month more in cashflow. The new construction home does not see any appreciation for 5 years.
Meanwhile, the established neighborhood home appreciates 5% (conservatively)/year. $525k year 1, $551,250 year 2 and so on. So that $200/month or $2400/year cashflow on the new construction home is a red herring when compared to $25,000+ in appreciation annually.
Hope this helps you!