If you are looking to buy real estate for the sole purpose of using it as a rental, you want to be a bit picky about the type of property you pick up. You want to buy a home that doesn't have a lot of work that needs to be done on it so you can start offsetting the price of your purchase right away with rental income. Here are things you should look for in a home so you can have a great rental at your disposal.
Proximity to town/school
When looking to buy homes that you can rent out, seek properties that offer a convenience that people may be looking for, such as close access to schools or a nearby park. People looking to rent in your town may choose your home over others simply because of its location, especially if they have children or like to walk to nearby destinations.
In addition to close proximity to local luxuries, you want to make sure you choose real estate that is also in a great community where neighbors keep their yards presentable and there is not ample traffic blasting by constantly. A nice, quiet neighborhood can be most appealing to potential renters.
A good rental home has a fenced in yard. This limits your liability as a landlord by making your property more secure by keeping away neighboring children and animals and gives your renters the feeling that they really do have their own space. If you cannot find a property that has a fenced in yard, consider lowering your asking price by the cost of a chain link installation (typically around $6 or so per square foot) so you can buy a promising property at a great price and still install a fence for the yard.
Affordable living space
Finally, you want to buy a home you can rent out at a fair price in your area's current market. If you buy a home that has a high mortgage, you won't be able to rent it out for enough money to cover your costs and make a profit. For this reason you should consider smaller homes away from subdivisions since they are often cheaper to buy and easier to rent out cost-wise. Talk to your real estate agent about per square foot costs of each home you are considering buying so you can know what your true income potential is for a rental. Also, real estate agents often manage rental properties as well so they can give you a true estimate on how much clients are willing to pay for rent in your area.