My reason for this is that you know the area, what you like and what you would pay for that property.

If you are not used to purchase prices, you can use the rental price as your guide.

If rent in your area is around $600, then you should figure your purchase price times the interest rate. If this amount goes over $600, then it is not a good property.

This is because you should always factor in that you may be stuck with a property for a few months and will need to rent it out.

Although other investors may say otherwise, I do not recommend getting a home that you have to add money to cover the rent.  To me this defeats the purpose.

I always do my numbers before going into a project and those numbers must show me that the mortgage can be covered by a renter.  If not, I do not want to have to add more than $100 towards the rent.

I only do this exception if I am certain to make over $20,000 off the deal.