For the novice investor or someone who is seriously thinking about investing in real estate, perhaps the first thought is “what type of property to buy” and where. And the answer will most often be, “one that attracts more tenants.” That is true, properties located in an area with a high density of rentersinvesting in larger homes will certainly attract a lot of attention and help keep vacancy rates low.

Yet at the same time, buying a property where there are several rental units in the neighborhood can also suppress rental income as you’re competing with other landlords.

It’s common knowledge that younger people will rent more than the middle aged crowd. Those just out of school or starting a new job have yet to amass enough funds for a down payment and established a credit score. They’re on the lower end of the income scale as well and perhaps the last thing they’re thinking about is buying a home. Instead, they’re more concentrated on finding a good job. That means lower priced properties will be easier to rent because there’s more of a market for them. But higher there is a market for higher end properties as well.

Buying and renting out a four bedroom home in a nice neighborhood will provide greater cash flow and build wealth at a faster rate. That’s easy to understand when property values increase by 10 percent each year. 10 percent of $300,000 is much greater than 10 percent of $100,000, right? There indeed is a market for properties in the mid-to high end range and if you don’t think so, just do your own search for rental properties. If you’ve only paid attention to a two bedroom rental or a duplex, you may be missing out.