The author of the book that was linked at the beginning of this thread describes his approach to buying houses is to look almost exclusively at beachfront property or property in yuppie, trendy, downtown locations where young-ish professionals can be in the middle of the downtown action but still be able to walk to work. These types of places will generally provide (sometimes substantial) negative cash flows for the first several years, but they will frequently experience enormous appreciation, sometimes doubling in value in ~5 years. I think it's a sound strategy.