There are other important things to consider, but positive cash-flow is huge and sure beats the idea of mere short-term appreciation based solely on location:
You have two choices:
A swanky downtown San Diego condominium for $500,000, or
Three nice moderately priced boring suburban $165,000 condominiums.
Now most people would think location, location, location and want to buy the prize downtown. That’s because their only investment criteria is that they want to buy real estate in hopes that it will go up in value. And the problem with that strategy is that they are totally missing the most important piece of rental property investing — the cash flows the property can produce.
Read the whole article: Why Prize Investment Properties Are No Prize | Zillow Blog.