I heard Russell Westcott, REIN™ General Manager, in an interview on Inside Toronto Real Estate show say: "Buying an investment property should be like having a three course meal" and I couldn't agree more with him. Here is his, and my, approach to buying an investment property, otherwise it's not worth it:

Mortgage pay down: the generated rental income has to pay down the mortgage to build equity over the long term
Cash flow: the rental property has to generate cash flow after all expenses. Having an investment property is owning a business, and no one in their right mind would acquire a business that does not generate cash on a monthly basis
Capital appreciation: Investing in areas where there is long term capital appreciation due to job growth, infrastructure investments and immigration

I believe the above three courses, or rules, provide a solid foundation when deciding where and what to buy. For a complete cash flow, return on investment, cash on cash and investment property analysis, please feel free to contact me.