Out of state rentals can be a challenge. I have one and it has gone OK b/c I really researched the neighborhood I bought in before I bought and made sure it would attract good tenants. I manage the property myself, but only b/c I was luck to find some really trustworthy handyman to call when stuff breaks. If you have to use a property manager, it can be a major hit to your cash flow.
If you are in San Diego I would look in Phoenix, Riverside County or Central Valley CA before going to a place like Kansas City or anywhere in the Midwest. Arizona and CA have taken a huge hit in price so they numbers on rentals are the best they have been in a decade. You have a much better shot at future equity growth in these areas than the Midwest. You could also look in the more working class neighborhoods of SD, but you would probably need a condo to break-even on cash flow.
The keys I’ve found with rental properties are:
1. Try to find something with a 1% rent to price ratio. Meaning if you buy something for $100k, you want to get $1,000 in rent
2. It MUST be in a neighborhood that attracts quality long term tenants. It will be a nightmare if you have constant turnover and/or sits vacant. You lose a lot of money when properties turn over tenants (vacancies, new paint, new carpet, etc..)
3. Try to find a newer built property or one that has been updated. Then you will have far less things to repair and replace. Houses have a ton of things that need to be fixed (AC units, furnances, roofs, appliances, landscaping, water heaters, garage door openers, flooring, etc…). If you have to replace a lot of these items the repair costs can eat up your cash flow.
