Investor · Lansing, MI · Member since 2014 · 86 posts · 31 votes
In my area, I've noticed a lot of multifamily properties with 4 to 12 units, and all units are 1/1. In my opinion, and correct me if I'm wrong, 1/1 units are useless. Who rents a 1 bedroom, 1 bath? College students, and people who needs a place for a few months - a year max...or worse yet, an family that's trying to save money and cramming everyone into 1 bedroom.
In any scenario, 1/1 renters don't stay long, and the turnover rate is high. As a buy and hold investor, I try to keep turnover to a minimum - I don't want a job as leasing consultant - it's much easier to just go apply for a W2 leasing consultant job at the nearest apartment complex than it is to buy $100k+ properties so I can make this job for me.
I would imagine multifamily properties with 3beds, 1bath+ are ideal - they attract stable and long term tenants.
So why would anyone buy/build an apartment building with 8 units, all 1/1?!
Rental Property Investor · Lockport, NY · Member since 2014 · 119 posts · 109 votes
11y
Most of mine are 1/1 and they are always filled with single people that work and are hardly ever home. No kids, no noise, no problem. Average stay is 2.5 years and the units look just like it did when they moved in (as opposed to my 3/2 where the kids bounced off the walls. I'll take them all day long.
Rental Property Investor · Lockport, NY · Member since 2014 · 119 posts · 109 votes
11y
Most of mine are 1/1 and they are always filled with single people that work and are hardly ever home. No kids, no noise, no problem. Average stay is 2.5 years and the units look just like it did when they moved in (as opposed to my 3/2 where the kids bounced off the walls. I'll take them all day long.
Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
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I have a big demand for 1/1's. They tend to have a higher turnover than larger units but at the same time I can generally find someone that wants to move in right away and often only have a week of vacancy. Some of my best tenants in the 1/1's are older people on social security or people on disability. Some of my younger working tenants have used my 1/1's as a starting point and have upgraded to larger units or single family homes.
Investor · Port Washington, NY · Member since 2014 · 13 posts · 6 votes
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1/1 and 2/1 are the best renting units for me, I got a 4/2 and it takes so much time to find a tenant. I would consider 1/1 and 2/1 to be the best investment candidates in my future plan with muliti family houses.
Investor · Kansas City, MO · Member since 2013 · 465 posts · 170 votes
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How big is rest of the appartment? The woman and I lived in a 1/1 for 2 years. We never needed the extra bedroom. We actually looked at renting a 2/1 but we didnt want to go for the higher rent and just more space to store stuff. Then we bought a duplex 3/1 and 2/1. Currently living in the 3/1 and well it is way to much space for us.
Investor · Arlington, VA · Member since 2012 · 1k+ posts · 491 votes
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I have two 4-plexes that are all 1/1s. They are in high demand here in St. Louis. They are recent purchases, so they have not been seasoned, but my fingers are crossed!
Real Estate Investor · Berkeley, CA · Member since 2014 · 143 posts · 91 votes
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I suppose it depends on the area. If it's located in a city near a college or a city where there is more demand for 1 bedrooms, great. Lots of people will want to rent those places. On the flip side, let's say you are in a part of the country which is more family oriented such as Utah (excluding Salt Lake city), it may be harder to rent.
Investor · Salt Lake City, UT · Member since 2012 · 19 posts · 10 votes
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I am in SLC, UT and 1/1 are my favorite (Downtown area) high demand, typically one occupant, very easy to rent.... My building of choice would be a 10-20 plex all 1/1....
Hingham, MA · Member since 2014 · 73 posts · 29 votes
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No kids, no lead paint concerns, easier on evictions with no kids and depending on where you live, sometimes a couple with double income...just my opinion !
Rental Property Investor · Brooklyn, NY · Member since 2014 · 722 posts · 1k+ votes
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@Bao Nguyen Even on larger properties, the 1BRs are the easiest to rent, since your typical renter is a single person. We find that 1BRs and 3BRs are the easiest to rent, and 2BRs have the highest vacancy rate. Part of the issue is that there are usually just more 2BRs in a market, so there is more supply, while 1's and 3's are less common. So, if you find a property with all 1BR's go for it. Your rent per SF on a 1BR is probably going to be higher than on 2's and 3's as well.
Investor · Lansing, MI · Member since 2014 · 86 posts · 31 votes
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@Jonathan Twombly Thank you for the input. I do see a 6-10 unit apartment buildings occasionally, where all units are 1/1. I've been biased to focus on 3 bedroom units (whether SFH or apartments or duplexes, etc). But I guess I need to realize there's opportunities in 1/1 as well, from what people are saying. I will definitely pay more attention to apartments with all 1/1.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
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1/1's near a college shouldn't be an issue if it's close and cool, kids like cool you know.
Are these upscale, middle income or low/mod rentals?
Don't forget about leasing to organizations, veteran organizations, non-profits serving their clients, the 1/1s are ideal for organizations and they lease the entire complex annually or longer, you can also work out tax benefits with qualified organizations and the PR is great, they can actually bring you more business.
They are often less maintenance, quick to rent, easier to get ready, on a per ft. basis, you'll usually get higher rents, so there's nothing to shy away from, just check the market.
As to cramming more tenants in, I'd say not, most areas have limitations per unit anyway. :)
Broker · Logan, UT · Member since 2013 · 1k+ posts · 1k+ votes
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We are in a college town. So pet friendly 1/1's rent within hours usually to grad students who stay year-round for their entire program (years).
But to add to the thread, look at your local zoning. Our zoning mandates # units/acre instead of total occupancy/acre. As there are fixed costs per unit in new construction (HVAC, bath, kitchen, etc) the marginal costs of adding bedrooms are small. Therefore, all of the new multi-family construction in the area has been two beds and up.
For example it might cost $140K to build a new 1/1 duplex and get $900 in rents or $160 to build a 3/1 duplex and get $1600 in rents.
Because of the way the zoning works, we are not adding any new capacity of small units, so they're great for the buy-and-hold investor as they are becoming a rarer and rarer commodity as a percentage of the entire market. Moreover, even at the same price as 2/1's, many educated tenants prefer the smaller units because of utility costs.
Christiansburg, VA · Member since 2014 · 7 posts · 2 votes
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My 50 unit complexes have a few 1/1 units in them. We were planning on a lot of turn over with the collages where were close to. They are full of production workers. They stay 2+ years and very few issues with them. The 2 50 unit apartments had the plans changed to make more 1/1 units with a larger sq' to increase the rent and that's the main issue they have. IMO a 1/1 should never have to walk through a bedroom to use the bathroom and we get told how nice is it all the time when showing apartments.
We found collage kids are going for 3 bedroom apartments. A lot of them try for 6 people in a 3 bedroom, it kills our parking lots, lots of maintenance requests, and a lot of times they try to get us involved with them nitpicking each other.
Investor · Lansing, MI · Member since 2014 · 86 posts · 31 votes
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@William Hochstedler@Bill Gulley Thanks for the excellent input guys. Very good points that I need to have in the back of my head when looking at apartments.
I am in SLC, UT and 1/1 are my favorite (Downtown area) high demand, typically one occupant, very easy to rent.... My building of choice would be a 10-20 plex all 1/1....
Would you agree though that there are parts of Utah where a building full of 1/1's just wouldn't make sense though? I found a building up near Ogden a while back and it looked good, but I remember what a colleague of mine told me up there. He said that because the culture is more family oriented, they would be harder to rent in that region as many residents tend to have families younger and prefer SFH. Just wanted to get your take.
Would you agree though that there are parts of Utah where a building full of 1/1's just wouldn't make sense though? I found a building up near Ogden a while back and it looked good, but I remember what a colleague of mine told me up there. He said that because the culture is more family oriented, they would be harder to rent in that region as many residents tend to have families younger and prefer SFH. Just wanted to get your take.
I would say that the cultural norms create an opportunity. Much of the thrust of community development is geared toward family oriented neighborhoods. As a result there is a shortage of housing for anyone who does not fit into the ideal family structure: divorcees, career oriented women, unmarried people, gays--anyone undergoing a life transition. They all live here too.
We joke that it's not so much that Utahns love the 1950's, it's that they're terrified of the 60's. Well the times they are a changin'.
Investor · Fort Lauderdale, FL · Member since 2012 · 1k+ posts · 465 votes
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Depends on location.
1/1s down here in south Florida can be in high demand from younger professionals as well as the retired.
my 1/1s are within 80' of a access point to the Fort Lauderdale New River that leads to the ocean, so I have high demands from single tenants who comes with paddle boards and kayaks. In fact I provide a kayak fir their use.
One other thing, single young professionals are very good in making quick decisions on the spot, "yes I want this unit and here is my app fee and can you hold it for me if I pay you another $500?" while a family takes their time "we need to discuss it this weekend...Joe is concerned about not having room to store his extra motorcycle...Judy doesn't like the color of the drapes, and she would really like a natural gas cooktop and not electric..." Okayyyy let me know when you decide.
Best person to rent to are singles in 1/1, those just entered into a relationship and have moved into the BF/GF place, and they need a place as a fall back in case they break up, you have zero I mean ZERO wear and tear!
To answer this question, location is extremely important. Again real estate is local.
I am also an Illinois licensed real estate broker as well as a property manager. I see tons of multifamily properties in my mls that are 1/1. There are just a few which are 2/1 or larger. There is a reason for it, most investors want 2 bedrooms or larger in my area.
I don not buy one bedroom multifamily properties myself as they have a very high turn over in my farm area, single person comes in a hurry, trash the unit in 3-4 months and move out or I have to evict them.
2 bedrooms or larger units are much better, you have either a couple or even one person who stays there on average of 3 years or more. They don't want to move every few months as moving with stuff quite often is not easy. In addition to turn over issue, one bedrooms in my area are far lower in rent than a 2 bedroom would give you.
That is my experience that I have shared. You have and will get all different opinions.
Investor · Lansing, MI · Member since 2014 · 86 posts · 31 votes
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@James Syed I agree with you James. I think my area is similiar to yours. But in more urban areas, as others have confirmed, 1/1 are good money makers as long as you are ok with being a more active landlord. I'm lazy, I want to rent and not see the property again for a year, 2 or more if possible. :-)