What's the Best Size for my 1st House? (That I'll rent in future)

18 Replies

First Forum Post! I'm Moving to Phoenix at the beginning of the year for work and am planning on buying my 1st house. I'll live in the property for the forseeable future (2+ years), but will probably move at some point after. I will want to rent the home after that. I may even look to move into a different home and rent this one sooner, who knows?

My question is: How should I approach the size of this house? If I were buying purely for my spouse and I's needs, it would be 2 BR; 1 to use as an office of for guests. That being said, I've been advised that 3 BRs typically make better rentals. I can understand why, but I'm generally conservative and it's tough getting over buying more space than I currently have use for. If I'm thinking long term and have the appropriate funds for either, should I do 3 BR? Or start with 2 and move up in the future? Other thoughts?

Thank You!

I had this exact question with my first house, and if you budget allows it-- go for a 3bd!   If it's a 3bd, you will more likely get a family and they are more stable IMO.   The 2 bedrooms are much tougher to rent out, as you're searching for a single person or maybe someone with 1 kid, but then there is no storage.     You'll get more rent, and have a lot larger market for a 3 bd, so if your budget allows it-- definitely do a 3 bedroom home!

Originally posted by @Linda S. :

I had this exact question with my first house, and if you budget allows it-- go for a 3bd!   If it's a 3bd, you will more likely get a family and they are more stable IMO.   The 2 bedrooms are much tougher to rent out, as you're searching for a single person or maybe someone with 1 kid, but then there is no storage.     You'll get more rent, and have a lot larger market for a 3 bd, so if your budget allows it-- definitely do a 3 bedroom home!

Thanks Linda! This is what I've been hearing too!

 

I agree, three bed will give you better options in the future. (Rental, resale, whatever.) If you're worried about the numbers, take a look at some 2 beds and 3 beds to compare prices. I bet it doesn't cost as much as you think to add that third bed. 

Happy to answer any questions about the Phoenix market!

@Cory Tollefson the property that will appeal to the widest spectrum of future tenants is going to be a 3 bedroom, 2 bath home, with a minimum of around 1,400+ interior square footage. Tenants may not have as much real estate experience as actual buyers or investors, but they still look for many of the same things buyers do such as good location, proximity to freeways, proximity to shopping/amenities, and school ratings. A 2-car garage and ample back yard space might also be must haves for tenants with kids.

Some attributes I try to avoid with my SFH rentals:

- HOAs. They're not a deal breaker if the monthly dues are low enough (<$60/month), but all things considered I generally avoid them. 

- Pools. Some tenants will be looking for a house with a pool, but many do not. I'd avoid the long term cost and liability and just buy a house without a pool. 

@Cory Tollefson I will echo what everyone else is saying. In general, if you are able to afford the 3 bed home, that is likely better for turning it into a rental later in terms of the tenants you’d attract and the potential rent you can charge.

From personal experience, I rent my former primary residence which is a 3 bed 2 bath and I think the third bedroom made a huge difference (at least in that particular instance).

Regardless of which route you choose, it’s great that you are looking to turn the home into a rental down the road! Good luck!

@Ryan Swan

Thanks for the thorough response! I actually have been avoiding pools in my current search for the same reason, but hadn't really thought about the HOA matter as much. There was a house we put an offer on and I found out about the HOA situation after. It still seems to fall into what you're saying ($50/mo), but I was also a little disappointed to find a policy that prohibited short-term rentals like Airbnb. That wasn't the primary way I was planning to use the property for rental, but it would grant some flexibility.

My niche is 2br/1ba. First, there's less competition from other buyers. Second, you tend to have fewer tenants, and therefore fewer headaches. Third, the cost of the house is significantly lower compared to a 3br, but rents are not proportionately lower. Yes, you may have a harder time reselling it, but I don't think that rule of thumb will hold true much longer as millennials tend have smaller families and, as a result, gravitate towards smaller dwellings. My only 3br is my least favorite property, and I do not plan to keep it after it's lease is up.

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