When evaluating an investment property it is important to pay attention to a few factors. The first is the location of the property. The second is the condition of the property, and the third is the price of the property.
Location and predicting what areas will appreciate in the future are what can help you make huge returns. In the Philadelphia market where I invest, in often see properties that are selling for $250k or more, that used to be worth $50k a mere five years ago. A good example of this is in areas like Northern Liberties which used to be called "North Philly". Homes are now selling for well over $500,000 in that area. Less than a decade ago, these same homes were worth $50,000 or less. Gentrification has taken place and taxes for homeowners have increased three or four times. Meanwhile, new homeowners and developers are getting ten year tax abatements which encourage development and homeownership to those that can afford to pay $500,000, if not more, to live in the area.
I was talking to an elderly woman the other day and she described how her taxes went from $600 a year to $3200 a year and expressed her desire to move. She told me that her property was "reassessed". I didn't even tell her that my friend lives in the same area and doesn't have to pay taxes for ten years. The irony.
Location will determine the present and future value of your property. Developers have also been known to single handily change an area as was the case with Northern Liberties. Pay attention to what is going on in communities around you and get in front of the curve.