BiggerPockets

My take is, if the numbers work (and if they're correct), the numbers work.

A house that rents for $650 where you're all in for $20,000 sounds like a no-brainer to me, too, unless it's in a war zone.

If there's a rental market for your X/1 properties, go for it, especially if you have no plans to retail the property.

Look on the bright side: one less bathroom to take care of!

I have been buying as many of these deals as I can. My area is very similar to yours. Rents high, purchase prices low. I have 1 4/2 that doesn't seem to cashflow as well as my 3/1's or 2/1's. Plus it seems to be harder to rent because of how big it is. People seem to be scared of the heating bills in the winter. The other plus is less maintenance on smaller houses. I plan to only buy more 2's and 3's they seem to be where the moneys at in my area. I have a buy/hold strategy

i have some 2/1s and 3/1s...my tenants have been very loyal for the most part...most came from apartments, but i keep my rent fair...they're pumped that they can rent their own house with a yard for near the price of an apartment...actually sometimes less (maybe it's time to bump rents)...people rent 2/1 apatments and 2/1 sides of duplexes all the time...i'm nto sure why there's such a stigma on 2/1 houses for rentals..i've had good luck so far with 2/1s and 3/1s

I don't mind 3/1s IF I can add another bath either now or later. Although it's not a cheap project, it does give me additional options.

Around here 2/1s - either apartments or SFHs are becoming functionally obsolete.

"Know your market".

We currently have Three 2/1 houses, One 3/1 and our most recent is a 3/2. The 3/1 bath is a overall smaller house (right around 980 sq ft) so not concerned with the heat bill as I don't think that will be an issue for tenants. However, our most recent 3/2 is 1,600 square feet. I am a bit concerned about it being quite a bit bigger as far as utility costs for a tenant. Plus, of course with that much more room we are bound to get a larger family. Not that I have a problem with that as I don't but I know children can be hard on houses (my own children have been hard on ours!). So will be interesting to see how this goes.

My husband and I were actually talking about this very topic the other night and he and I both agree we don't mind the 2/1 homes at all. They are smaller, lower maintenance and the tenants we have in ours now are either single women (w/teenage son) or a couple with no children. My husband had to go over to each of these homes for some small fix and he says all 3 houses are very very clean. That in itself couldn't make me happier :D

So yeah, I have no problems with 2/1 in nice neighborhoods.

If the deal looks good and the market is strong for those types, then I say go for it.

I think this is a matter of preference. Myself, I don't buy 2 bedroom homes simply because if you pull stats in the market I invest in roughly 20 some percent of homes sold last year are two bedrooms. Nearly 60% were 3 bedroom and the rest 4 bed and above. I have a buy and hold strategy mostly with occasional flipping however everything I buy I consider it's resale potential later. Simply, I don't buy properties that may be difficult to resell later. I agree with the 3/1 properties especially if they are in a great neighborhood or have the potential to add an additional bath later, there is a market for these homes. Best of luck!

Good discussion.

Thought I'd provide a quick update. I did bid on the 3/1 house. My bid was rejected and countered at full asking price. I told them to go pound salt and didn't offer up a counter of my own. (there's to many deals out there to deal with a jerk face full asking price counter).

One week later they sent another counter at full asking price.....I told them to go pound salt again.

House is still sitting on the market.