2 Bedroom 1 Bath SFH are they even worth my time?

Rochester, MN · Member since 2018 · 79 posts · 36 votes

Has anyone had success renting 2 bed 1 bath single family homes? There are a lot more of those homes in my area for sale for more reasonable prices. Tell me your experiences! Thanks! Alec

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Bob B.

Investor · Jasper GA · Member since 2015 · 1k+ posts · 1k+ votes

I have 2-1 and have had an older couple in it for 7 years. They've never been late and put new kitchen cabinets in a couple of years ago. I told them I'd have to raise the rent for the new kitchen. lol. I think I'll need to bury them in the backyard as they will probably never leave. As long as you can get them cheap 2-1 are as good as anything else.

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Max Gradowitz
Bakersfield, CA · Member since 2016 · 378 posts · 307 votes
8y
Yes, I rent out 2 bedroom 1 bathroom homes in my market all the time. But Cali is a pricey market so small homes are common. Definitely depends on the local market.
0 Reply
Max T.
Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
8y
It’s a starter home and makes for a good rental for people in a similar life stage. I do well with them in the hip Philly neighborhoods renting to yuppie millennial types.
3 Reply
Alec McGinn
OP
Rochester, MN · Member since 2018 · 79 posts · 36 votes
8y
Both awesome posts guys! Thanks!
0 Reply
Bob B.
Investor · Jasper GA · Member since 2015 · 1k+ posts · 1k+ votes
8y
I have 2-1 and have had an older couple in it for 7 years. They've never been late and put new kitchen cabinets in a couple of years ago. I told them I'd have to raise the rent for the new kitchen. lol. I think I'll need to bury them in the backyard as they will probably never leave. As long as you can get them cheap 2-1 are as good as anything else.
5 Reply
Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
8y
I have 4 of them , love them . I can give you between 1275 and 1500 reasons every month
4 Reply
Jared Skov
Rental Property Investor · Lanai City, HI · Member since 2018 · 64 posts · 70 votes
8y
It's all about cash flow, your money making you money. What will the cap rate be? I don't know your market, but in the Seattle area, any cap rate >7 is a good deal.
0 Reply
Alec McGinn
OP
Rochester, MN · Member since 2018 · 79 posts · 36 votes
8y
Jared, how do you go about determining cap rates for a particular market?
0 Reply
Brock Mogensen
Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
8y
I'm in the same dilema right now. There's a lot of 2-1's and not many 3-1's in my area for a good price. I'm to the point where I'm just ignoring the bedroom count and basing it off of what my total cash flow each month would be.
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Derrick E.
Investor · The Creek, WV · Member since 2014 · 890 posts · 1k+ votes
8y
Originally posted by @Brock Mogensen:

I'm in the same dilema right now. There's a lot of 2-1's and not many 3-1's in my area for a good price. I'm to the point where I'm just ignoring the bedroom count and basing it off of what my total cash flow each month would be.
Exactly what I do and then look for 2BRs that can easily be converted to a 3.
3 Reply
Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
8y
Can you make them 3 bedrooms? I don’t know Rochester very well but if they don’t meet the 1% rule I wouldn’t even look at them. I buy apartments with 2 bedroom units but wouldn’t want a 2 bedroom house in Minneapolis because it wouldn’t cashflow very well.
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Account Closed
Investor · Saskatchewan , Saskatchewan · Member since 2017 · 311 posts · 233 votes
8y
I do suited houses almost exclusively. One of my best performing assets was a ugly 2up 1down bilevel that is now a much nicer 3up 2 down. a ~12x12 raw laundry room in a suited house is a bedroom ~$3,000 later. Regardless of if it’s suited, make sure the bathroom is laid out well enough that a 60” double vanity works. Always double vanity.
1 Reply
Rachel H.
San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
8y
@Alec McGinn I've done it with mobile homes. They are great for starter families if there's a need. Seniors are also a good target market for this niche. Depends on the supply and demand in your area. Good luck!
1 Reply
Craig CurelopBusiness Member
Real Estate Agent · Post Falls, ID · Member since 2016 · 1k+ posts · 1k+ votes
8y
@Alec McGinn - there's a lot of money to be had in 2 bed/1 bath single families. I suggest trying to find one that is at least $1,000 square feet and look to add an extra bedroom and possibly a bathroom.
This way you'll boost the equity value and increase the rents. A 3/2 is much more attractive than a 2/1.
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Ola Dantis
Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
8y
@Alec McGinn Millennials are waiting longer to get married, some are buying dogs, and some are working from home (needing a home office-second bedroom).
At the other end of the spectrum, the generation who are considered empty nesters are now downsizing and some simply rent this type of SFH.
These 2/1s are still a very popular choice for these type of renters.
Renting, in some instances, is a lifestyle choice and nothing to do with the tenant's financial situation.
Hope this helps. Goodluck. Thanks! - Ola
4 Reply
Alec McGinn
OP
Rochester, MN · Member since 2018 · 79 posts · 36 votes
8y
Thanks for the reply’s! Do you folks that live in the north ever have trouble with renting out SFH with single garages?
0 Reply
Gerald Peters
Investor · Huntsville, TX · Member since 2015 · 43 posts · 65 votes
8y
Those are bread and butter! Brand new roof on 800 sq ft home $3500 it’s half the price, but rents still solid. I own dozen 2 BD 1 bath they stay rented with good people trying save on rent. It allows me to be super selective in who I rent to and everything cheaper. Less paint to paint, less flooring, only 1 bath room etc and you want to sell them you can have buyer next day my area. Real GEMS, wish I had 200 of them!
2 Reply
David B.
Investor · Grand Rapids, MI · Member since 2014 · 12 posts · 4 votes
8y
I love the 2/1 option in my market. The CapEx and repair budgets can be lower because it costs far less to do roof/paint/flooring on a 650SF ranch than a 1650SF 2 story. In different parts of my market, then additional jump in rent from a 2/1 to a 3/1 is hardly worth it for the extra cost of acquisition, and there is still plenty of demand for a 2/1.
If this is an investment, then it’s all about the numbers in your local market. If the numbers locally make sense, I wouldn’t let a 2/1 scare me away.
Best of luck!
1 Reply
John Woodrich
Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
8y
Two answer both of your questions - I have a 2br house without a garage that is super easy to rent. It does however have a fenced in yard and we allow pets.
0 Reply
Lesley Resnick
Real Estate Agent · Jacksonville, FL · Member since 2015 · 1k+ posts · 1k+ votes
8y
It is a numbers game, If they numbers work, then why not. What you are looking for is a gap in the market. By that I mean, there are always properties that are out of favor and as a result offer a higher return. Small properties in Jacksonville are often like that. They are to small to cost effectively finance, so they become cash deals. This limits the pool of buyers.
The first bedroom and bath are the most profitable. Assume a 1/1 would to rent for 600, would the 2/2 rent for 1200? The same math continues with each additional bedroom/bath being worth less.
1 Reply
Seth Borman
Rental Property Investor · Phoenix, AZ · Member since 2016 · 553 posts · 314 votes
8y
We've got a bunch near Tacoma, WA. About to close on two more for a total of eight. We BRRRR them and end up with 30% CoC returns, not including principal repayment. Down the street we have MF investments and a 3/1. The 3/1 offers much lower returns, but it was always a land deal.

Ultimately you need to let the numbers be your guide.
1 Reply
Nicholas Zaharevich
Rental Property Investor · Spanaway, WA · Member since 2016 · 82 posts · 41 votes
8y
The one 2 bed/1 bath house we have has never been vacant in the 7 years we've had it, but it does turn over more frequently than our others that are 3 bed/2 bath. The smaller house tends to rent to older singles or younger couples.
0 Reply
Tyler Jahnke
Rental Property Investor · Oakland, CA · Member since 2016 · 341 posts · 643 votes
8y
If it cashflows it's definitely worth looking at. And if you have a little extra square footage to add a 3rd bedroom? Now that's a cherry on top!
-Tyler
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BJ Everson
Property Manager · Columbus, OH · Member since 2017 · 123 posts · 76 votes
8y
I never bother with them in the Columbus OH market. however, I do look for 2/1s that are over 1,000 sq ft to then add a 3rd bedroom if possible as a flip.
0 Reply
Jason L.
Rental Property Investor · Delray Beach, FL · Member since 2014 · 224 posts · 169 votes
8y
Originally posted by @Ola Dantis:

@Alec McGinn Millennials are waiting longer to get married, some are buying dogs, and some are working from home (needing a home office-second bedroom).
At the other end of the spectrum, the generation who are considered empty nesters are now downsizing and some simply rent this type of SFH.
These 2/1s are still a very popular choice for these type of renters.
Renting, in some instances, is a lifestyle choice and nothing to do with the tenant's financial situation.
Hope this helps. Goodluck. Thanks! - Ola
Yeah I think Ola has it here. 2/1s are certainly more limited in their broader appeal to renters, but they work just fine in areas with single people (with or without a roommate) or a couple with no kids. In other words, 2/1s are good for college students, young professionals, and maybe some retirees on the other end of the age spectrum. I certainly wouldn't want a 2/1 in any area characterized by families.
1 Reply
John Teachout
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
8y
We recently acquired our first 2/1 and feel like it is really a sweet spot. This house will rent for $750. It's 1000 square feet. Has a nice sized eat in kitchen with a dishwasher. Has a laundry room too. In the same area, a 3/1.5 would rent for about $850. So considering the investment cost, I think this house will cash flow very well. They're an ideal house for a single that wants a bedroom and an office. While a third bedroom could possibly be squeezed into this house, I don't think it would be worthwhile. We'll know more in another year or so.
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