Are 2/1 or 2/2 Good Rental Properties in Tampa, FL?

10 Replies

I am new real estate investor.  I sold my first rental property and looking for a new deal.  I am finding some good deals for 2/1 and 2/2 which is closer to my initial investment price point.  The question I would like to ask the group is:  Is there a good market for 2/1 and 2/2?  I have been looking at 3/1 and 3/2, but I would love to hear the opinion of others.  Do you think 2/1 and 2/2 could be good rental properties or should I plan for a longer holding period?  I will check padmapper.com and past rental listings, just would like to hear another point of view.

Thanks!

Lakeisha

This is an interesting question because it really is a matter of perspective. I would only imagine that the correct answer is that a deal is a deal. It becomes a matter of target renters, I believe it was John Schaub who pointed out that 3/2 will attract families with lots of stuff who are less likely to move. In my opinion 2/1 will attract younger families or roommates, which can be fine depending on your screening process. Location could also come in to play, if there is a shortage of rentals of one variety or the other then you may find that the property in demand is the way to go. 

We managed two 2/1s in Texas. The small 2/1 was always rented by those who only could accept 2/1s. Obviously, no one needing a 3/1 would bother. Rents were lower too. My larger 2/1 had 3 living areas. Meaning, a LR, sunroom, and basement room w closet. I advertised this one as a 3/1 (although it was a built 2/1 with a sunroom addition and basement room addition). I had countless more interest, charged nearly 50-75% more rent over our 10 yr managing period.
Presently. We manage for investors a 2/2 which is in a 3/1 and 3/2 neighborhood and was vacant and on MLS For 14-16 months. 2s are simply NOT desirable and should command lower resale and rent prices. We remodeled the 2/2 to become a 3/2 by dividing an extraordinarily large sunroom into a smaller sunroom and a third BR. Needless to say, our visitor volume for potential renters is higher upon the idea it's a 3/2.
Obviously those who don't like the idea of a fully walled, remodeled 3rd BR being a former sunroom don't rent from us. Those who don't care, rent and pay a 3/2 price. Sum: if you can chg a 2-2 to a 3-2 then buy the house.
Truly I found the issue isn't number of BRs but number of baths! We manage a 3/1 and everyone asks where the second bath is!

2 baths instead of 1 = 1 more maintenance item for the landlord.

Personally I've had great success with 2/1, 3/1 properties, over in the Orlando area. The biggest reasons are 1) tends to be older housing stock before families "needed" a 3/2, 2) is less desirable since buyers want a 3+ meaning buy price is better, 3) tenant demographic tends to stay longer. 

In my area I usually end up renting to single parents, older couples(meaning grown kids or last kid getting ready to leave in 2-3 years) or grandparents who wants a spare room for when grandkids come visit. None of those people want to move frequently, I think families tend to move more because they become pressed to as kids outgrow certain things in the area (school, sports, friends) or new kids are added to the mix. 

That being said I like really distressed stuff. Since it's older I want distressed enough to justify replacing all the big stuff so I know it will be fairly maintenance free and it means that my home looks fresh. I like damaged baths and kitchens since those areas tend to have rot. I like getting the discount and making the repairs so when I get a tenant it's clean and new. I also have been told by every tenant I've ever had that my unit was the nicest best one they looked at and best price. 

I work north of Tampa in Pasco county and in my opinion, the answer requires a few more details. I stay away from the tiny 2/1's under 1000 square feet. I have a large 2/2 with a family room that rents for only $50 less than a 3/2 that I have a few miles away ($750 vs. $800.) The Tampa market may be different but I think the individual attributes of the 2 bedroom houses have to be considered. I will only buy a 2 bedroom if it has a secondary living area (family room, FL room...)

Thanks everyone for the good points to consider.  I am going to do additional research on the rental market for 2/1 and 2/2 in Tampa and will report back later on tonight with what I find.  I think that it may be easier to achieve the 2% rule with a 2/1 or 2/2 than it is with a 3/2.  Sorry if I am stating something obvious :-)

I think it will probably depend on what part of tampa you're in. Obviously the suburbs are going to attract more families, which most of them would require something bigger than 2 beds. However if you're near USF, downtown or the beach, you may be able to appeal to younger couples or students. As long as you can make money off the deal, it doesn't really matter.

Hi @Lakeisha Black  I Agree with @Fred Conway  in that it really depends on the area of town.  If you are in South Tampa your 2/1 will rent without a problem, if you're out in Brandon, it will probably be more of a challenge as there are an abundance of 3/2 and larger.  I also agree with @Doug Merriott  that there is a buyer / renter for every home, The first home that I bought was a 2/1 with a Florida room (900 SQ FT) that was in 2003 when I was a single guy, after two years, adding a wife and a baby we wanted more space. 

Think about renters, you can rent a 1, 2 , or 3 bedroom apartment, If there wasn't a market for 1 or 2 bedroom homes why would someone invest millions of dollars to build an apartment community.  If you can offer your house for prices comparable to the rents in local apartment communities, and have comparable amenities (pool excluded) I think you'd have a competitive advantage in that you are offering a house which gives more privacy.

@Lakeisha Black  the #s might work but if I have a choice then I'm always going with 3 or 4 bedroom homes because you increase the size of potential tenants who will rent from you. I personally wouldn't buy a 2 bedroom. 

Originally posted by @Lakeisha Black :

Thanks everyone for the good points to consider.  I am going to do additional research on the rental market for 2/1 and 2/2 in Tampa and will report back later on tonight with what I find.  I think that it may be easier to achieve the 2% rule with a 2/1 or 2/2 than it is with a 3/2.  Sorry if I am stating something obvious :-)

 are you seeing the 2% rule in the Tampa area? I am seeing .8-1.2% in the South Tampa, Brandon areas with the numbers i run. 

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