Step edge junction (SEJ) rf-SQUIDs were made of 200 nm thick YBCO films on LaAlO3(100) substrates using pulsed laser deposition technique. The steps on the substrates were developed using a combination of stationary and rotating angled argon ion beams with different beam energies and intensities. While sharp clean steps with heights up to 300 nm were obtained on the substrates using the combinatorial ion beam etching (IBE) process, very shallow ramp-type surfaces were found developing on the bottom of the trench, close to the steps. The ramp-type surfaces were found to be a source of hole-type defects in the films grown at the step edges. High quality films could be obtained on the flat regions away from the steps. Higher defect densities in the films close to the SEJs resulted in devices with higher 1/f noise and wider spread of the junction parameters. The 1/f noise of such devices increased with decreasing temperature. High quality films on sharp clean steps with flat substrate surfaces, developed using optimized combinatorial IBE process, resulted in higher yield of low 1/f noise SQUIDs. The Ic of the junctions and hence the working temperature of the SQUID could also be controlled by the junction width and the step height.