9. Look for a return greater than 1 percent per month of sales price. An old maxim of real estate says that a rental property yielding 1 percent of the sales price per month is a good deal. In other words, if the home cost $100,000, you should get $1,000 per month in rent, or about 12 percent annual yield. But in many areas of the United States today, home values have declined substantially and investors can now achieve greater than 1 percent per month returns.

Let me share two examples of homes that I purchased with cash in 2013. The sales price of the first was $62,000. It rents for $1,050 per month, an annual yield of more than 20.3 percent. I bought the second one for $39,900, and it rents for $795 per month, an annual yield of 23.9 percent!  Even factoring in repairs and other initial expenses, the yields are still 15 percent and 18 percent, respectively, on the two homes.