Real Estate Investor · Hartville, OH · Member since 2010 · 148 posts · 174 votes
How are you guys approaching the 2BR/1BA and 3BR/1BA single family homes.
In my area I'm seeing some real value buys for these particular homes, especially for a buy/hold investor like me.
I know generally most folks would like to buy 3/2 and I'm no exception. However I'm seeing some opportunity with these particular homes, perhaps because investors traditionally shy away from them?
A good example is a house I'm considering bidding on today. It's a 3/1 brick bungalow in a nice working class neighborhood. I could own this house for around 12K and it needs about 8K in rehab. ARV is around 50K and will rent for $650/mo.
To me it seems like a no brainer, but maybe I'm missing something?
Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes
15y
I agree, for buy-and-hold your numbers make it a no brainer. For a flip, it's a greater point of concern, as the OO buyer is simply more demanding. For down the road, might be worth at least evaluating up-front the feasibility of adding a bathroom to enhance resell.
Others have said they love the 2/1's, as they're cheap relative to rents, typically are small needing less maint., and don't attract families with destructive munchkins. :)
Handyman · THUMB, MI · Member since 2010 · 72 posts · 14 votes
15y
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
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
15y
I have all 3/2s and up except for one 3/1. That 3/1 was going to be a rehab/flip, but it didn't flip. I now have a single guy in it who loves it and wants to buy it when his credit gets better. It has my cheapest rent at $680 and I think it will rent easily in the future, partially because I went over board on the rehab. I'd buy one baths again in really good areas, but I am partial to big homes where I haven't had problems getting premium rents.
Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
15y
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
Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
15y
Know you market and let the numbers or trends speak... however I've been told always buy properties with a garage. Tenants move in and pack it full... then they don't want to move....
Investor · San Antonio, TX · Member since 2008 · 21 posts · 3 votes
15y
I have 2 houses that are 3-1's. One of my houses is a 4-1 and I am getting 960 a month for this. (I bought it for 28k). I am not sure how I feel about 2/1 houses but I guess if the numbers work-I would buy.
I think your deal sounds like a great one. I wish we had those prices here. I would buy about 10 properties tomorrow!!
Real Estate Investor · Toledo, OH · Member since 2008 · 234 posts · 53 votes
15y
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.
SFR Investor · CB, IA · Member since 2011 · 91 posts · 42 votes
15y
I currently have a 2/1, 3/1 and 5/3; I don't have a problem renting any of them. I'll buy any combination of bed/baths as long as it's a good deal going in. The key is to have them competitively priced.
Real Estate Broker · Gilbert, AZ · Member since 2010 · 42 posts · 24 votes
15y
Seems to me that someday you are going to want to sell that 2/1. When that day comes are you going to regret not getting the 3/1 or 3/2. If you think that when that day comes you will get a fair price and sell it in a reasonable number of days then fine, buy the 2/1. If, today, you can get the 2/1 at a good discount over the 3/X then again fine.
In my area a 2/1 can not be bought at a significant discount but will likely need to be sold at a discount in the future so i stay away from them.
Real Estate Investor · Republic, MO · Member since 2010 · 5 posts · 2 votes
15y
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!
SFR Investor · CB, IA · Member since 2011 · 91 posts · 42 votes
15y
I understand the above points concerning resale issues of a 2/1; however, in my market I can get a 30% plus cash on cash yearly return renting a 2/1. I'll take my chances with the resale issues 20 years down the road.
Real Estate Investor · Hartville, OH · Member since 2010 · 148 posts · 174 votes
15y
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.