What makes a good rental property? Your goal should be to distinguish between a good and bad investment. You can make an in state out out of state investment and become an absentee landlord.
First you want to determine your area. Here are three key elements in finding a rental property.
First ask yourself how comfortable are you with risk? You need to be able to understand properties are typically rated with letters A-D.
An A class are would be a great neighborhood, with top school districts, and a very safe place to live. With a top area, expenses may be less since tenants may take better care of the property. Higher entry price typically means higher rents.
On the other hand, a worse off neighborhood would have a lower entry price, more day to day management involved, and higher likelihood of problem tenants. The lower entry price may mean lower rents. You may be able to get more cash flow, but it could be more headaches.
Ideally, you want to pick an area in between. Not a warzone or not a A Class area. Your property can be managed (if you chose to do so), provide great returns, and not destroy your cash flow.
Structure, Bones of House
It is best not to jump into the cheapest deal you can find. It will be more headache then it is worth. Unless you plan on putting in tons of work upfront, pick a house that is in solid shape. Think, would you want to live in the location and units? If you get an offer accepted, an inspector can typically tell you any major problems with the property. Also, they will provide you with a report that will tell you the status of the current home with items that are in need or repair or at the end of useful life.
Think of your rental market or target tenants before you purchase! Properties can sit vacant for extended periods of time if there is little demand in your target area. Is it a rental best suited for college students? Also consider how you plan on marketing your property, what websites will you use?
Hopefully include these three characteristics you can consider for your next purchase. Your goal should be to buy right.. Then manage right!