Will A 1 Or 2 Bedroom House Rent Out?
Will a 1 or 2 bedroom house rent out? I've heard time and time again to never buy a 1 or 2 bedroom house. They say that they never rent out or the vacancy rate is too high.. Your thoughts and ideas???
[addsig]
Alas, as is true in most properties, Location, Location, Location.
In the Hills of Hollywood some of the first houses I designed and then built were very small one bedroom homes, each an answer to an architectual problem and expressive of a lack of proper funding. One was an A frame actualy hanging from the midbar of the A. It has never been vacant in the last 40 years. For a while a lovely older man of undefind'd sexual preference rented it out, almost always to young persons in the film industry. I think he was trolling the tenants but whom am I to say.
Another one was a modified A with all sorts of balconies in imitation of the old searfaring homes where the sailers wife would stand on the decking looking out to sea, I think they called this a Widows Walk, well I built that one as a loft one bedroom. For over 15 years it was always rented and the parties most unusual. Now it has expanded has a unit underneath and an additional bedroom and a more normal type of tenant who actualy works 9 to 5. bad habit..
Of course my favorites were the two bedroom two bath modular 4 by 8 everything done to that dimension. They had fantastic down canyon views very modern and lots of glass. Great party houses but a real statement. All six of those little darbs were always full. Of course we built those for $16,000, sold for $35,000 and thought we were rich. They won an AIA award 1960. Latest sales now in the $500,000's.
As I said it depends on Locations, if you live out here and have lots of freaky highly talented unsteady tenant persons, why fear not, just make them eclectic and slightly unusual and all will come right.
Now why do you think I am playing around with Steel Shiping Containers taking them and creating really far out modern highly functional houses? Right on for money....and the glory of solving the problem of low cost housing...
Rapacious Lucius
The only way I get the dirt on "Hollywood exposed" is from the source,Lufos. I believe he was making reference to my father in one of those tales.
One and two bedroom properties are more difficult to sell, to rent, and to exchange. That can work to your advantange it you buy the unit at a bargain price. You make your money when you buy, but you don't get your profit until you sell. So, then next buyer will also be looking for a bargain.
I rent units in Austin on the East side. The ones are easier to rent because they are cheaper but the 8 or 10 people get tired of living like on to of eash other and move to a 2 br. A lot more turn over too. One i rented the dude said he had moved everything that he owned in a backpack. A month later he wsa gone and did not take all the trash furniture he had hauled in. I like 2 br at least wher you rent to families.
Hope this helps some
Ted Jr
Hi, Dale
With SFRs I have heard that 3 bd 2 baths are very desirable as rentals, however, I recently had an interesting conversation with an account manager for the largest property management company in the city where I have most of my investments. She told my that the demand for 4 bdrms was highest, followed by 2 bdrms and then by 3s.
Needless to say mine is a 3.
Regards,
Ed
Nearly all of my rentals are 2BR properties: 2/1, 2/1.5, and 2/2. Of the last 600 months of aggregate rental service, I think I can count the number of months of vacancy on one hand.
I like the 2BR units for my rentals because there is a landlord's market for these properties. They do tend to be harder to sell, which may explain my success at purchasing these as foreclosures (20% - 50% below market).
My favorite rentals are the 2br/1bath. In my area they rent extremely well. I especially like to get them with 1 bath because of the lower maintenance. Also I seem to get better tenants with 2br than with 1br or 3br. Although the market for 2br may be smaller than 3br, the supply of them is also much smaller.
I can add that most of my rentals are 2 bdrm as well. It is just that all of these are multi-family buildings. The demand in my main rental area is quite strong and no doubt the 2 bdrm units are easier to rent than a 3 bdrm house. The demand is stronger for the 2 bdrm because of pricing.
One thing some of my investor friends and I have noticed is a rental ceiling on houses. We figure that above that amount people may be looking to own rather than rent. This apparent ceiling doesn't seem to be that high, either.
IMO the 'Ideal Rental' is a 3/4 Br-2Ba on a Cul de Sac, in the center of a nice subdivision. However, Everything rents, at a price! Even 1 bedrrom, 1 bath!
I don't mind 2 Bd as long as you can put a wall down the middle and rent it as 2 one bedrooms.
Honestly a 2Bd in ATL is worthless. They don't even build 2 Bd anymore.
I believe it's been said but "location, location, location". 1 Bs near colleges do well with the possible summer vacancy, but grad students solve that problem they tend to stick around during the summer. I've dealt with investors who won't go near 1B but it depends on the market as well. They don't concern me too much there are enough situations out there that the 1B seems to be the answer to.
Reference San Diego, I was down there Thursday night to attend a lecture on morphing houses from shipping containers at Woodbury College School of Archit. Just so it wouldn't be a total loss I asked questions of some of the students, mix of undergrad and grad.
Because of high rents in city prefer 2 br in city proper close to schools. In the slummy area prefer 1 br in high security buildings. Grad students want l brs cause they Vant to Be Alone. PhD's and stuff take a lot of writing. Their favorite of course is the guest house in the city, with a pool and next door to a public library., Never Hoppin, but it does lead back to my original conclusion.
Location, Location,Location
landlordoting Lucius
I live in a small city on the shore of Lake Michigan. It seems that most of you posting here live in larger cities. I'm sure there are great differences when renting 2 beds depending on the area. Where I am, if you're a landlord with a 2 bedroom apt. you'll wait a long time for a renter to come along. If you have a 2 bedroom house however, it's a different story. Rental houses of any size and type are in demand here and the renters tend to stay longer in them and take better care of them too. Cash flow isn't great though if you have to pay PITI out of the rent recieved. You only have one tenant to get all of that out of instead of two. I buy the houses mainly for the eventual resale value. The houses gain in equity faster than the 2 family houses do. I have had a much better experience with houses of any size than I've had with the multi family's. I will be selling my last two family in the spring. I only will rent houses now. There will always be first time home buyers, retired buyers and single buyers and renters who will find the smaller home to be " just right" for them. <IMG SRC="images/forum/smilies/icon_wink.gif"> <IMG SRC="images/forum/smilies/icon_wink.gif"> [ Edited by Sandbahr on Date 11/23/2003 ]
Hi folks,
I'm new to the board but thought I'd put my 2 cents in about 2/1. In the old, dense port cities of Philadelphia & Baltimore, blocks of row homes were built for sailors to crash in when home in port. Over the years, these 12 foot wide 800 sq ft "cells" were abandoned by all who could leave for the suburbs and the neighborhoods deteriorated. Today there is some gentrification in the neighborhoods nearest the water, but the vast majority of row houses are inhabited by folks with lower income levels. For Section 8 rentals, the 3/1 or even 4/1 works well because the rent is guaranteed and is several times that of a mortgage payment. However, for non-Section 8 rentals, the 2/1 is a better investment as a smaller family size tends to have a little more income and a lot less wear and tear. Many times a senior citizen in a 2/1 is a perfect match as they will take care of property and their SSI is steady. The 3/1 non-Section 8 tenant has several kids, gets laid off, fights with boyfriend, etc. 2/1 go for $15-30,000 & rent for $450; 3/1 sell for $30-60,000 & rent for $600. That's my 2 cents, thanks for reading. Any of you west coast investors afraid of your bubble? Diversify with an east coast partner!
Jay
Exactly, thats the interesting part about real estate. It's too hard to generalize... every house, every area, every block is a little bit different.
I will also add that anything will rent out at the right price. I actually have a duplex that has two one bedroom apartments. This has been an excellent rental property for me. The tenants are two older ladies on SS. I had this place rented before I even had time to finish painting it. One reason they rent so well is that I was able to pick up the place for almost nothing because the owner couldn't rent the 1 br's. The problem was simply that he was trying to rent them for too much which is common with 1brs. Although it might be impractical to build this building new, I was able to buy so cheaply that I can give them a steal on the rent and yet I do very well myself. If you buy cheaply enough, and don't mind passing some of your good fortune along to the tenants, you can rent anything anywhere.