1 bed apartment OR Studio? Which is better?

Question

Hi Everyone,

I'm looking to convert a 425sq.ft storage area into a 4th unit in a small multi-family property.

Do you think I could get higher rent if it was a 1 bedroom apartment (i.e. bedroom with 4 walls and a door) or if I made it a studio apartment (i.e. one large living space)?

Any other pros/cons of each I should be aware of?

Doing a studio would definitely improve heating/cooling as I could put in a ductless mini split and it would work well for the entire area. I feel that a 1 bed apartment would be more desirable though from a renter's perspective.

Thanks!

Nicholas

Cody Barna · Answer

I think it comes down to your local market, what's common in that area? If the majority of options are 1 bed units that rent for $2,500 per month (example). There's two ways you could go about it, first is offer a 1 bed unit that's significantly nicer then the comps for slightly below market rent. The second option is to offer a modern studio for half the cost of a 1 bedroom, this gives someone the option to rent a slightly smaller place for a fraction of the cost. If I were the potential renter I would much rather rent a smaller unit with the same amenities for less, even if I was making the same salary as the individual who rents the 1 bed unit.

Steve Morris · Answer

Do you think I could get higher rent if it was a 1 bedroom apartment (i.e. bedroom with 4 walls and a door) or if I made it a studio apartment (i.e. one large living space)?

Speaking generally, 1 beds rent for more in absolute terms, however, odds are you'll get more $/SqFt for a studio.

Also, in general, more beds means less turnover.  Studios turn faster.

Kevin Paulk · Answer

@Nicholas Morgan First thing I would do is make sure I'm good with the city converting that storage area into a unit. If so, I would do a little homework on zillow, trulia, realtor, and see what studio's and one's are going for. That should give you an idea. I would also take it one step further and reach out to a couple of  property managers and ask for advice.

Good Luck,