The Importance of Layout

Investing in rental properties affords you an excellent opportunity to create an income stream, plus it is pretty exciting. The process can be both stressful and exciting as you go on the hunt for a deal, negotiate prices and deal with banks and inspectors. As you go through this process, it is important to keep your end game in mind. In other words, how is your renter going to see a potential property? It is easy to make sure a property meets your needs, square footage, bedrooms, bathrooms, and location. However, do you take time to consider how the space will work for your future tenants? What does the house look like, how big are the rooms and does it have a odd layout? All of the above and more will affect who will rent the property and how long they stay.

So exactly what are we talking about with layout? This refers to a basic structure such as the number of bathrooms and bedrooms but it does not end there. What is the size of the rooms? We are not considering marble countertops, heat, and air or any other amenity. These can be quite important but outside the time frame we have in this piece.

What is the first thing you should consider when it comes to layout? Your first order of business is to understand the overall market in your geographical area. Are you in a primarily retirement area or are young families the order of the day? Who is most likely to apply to rent your property? Young professionals will have vastly different requirements from young couples or families with children. The census bureau will give you a good picture of the local demographics. Next, consider what is currently available, your competition will let you know what you can get by with. For example, if you are in an area chock full of huge three bedroom apartments, a small studio is not going to be popular. All of this information is key to making solid real estate investment decisions.

Try to not get carried away with the excitement of buying a rental property and forget to consider the layout. Forgetting who will actually live in the house will be detrimental to your future earnings. Whether you are talking about single family or multi-family common areas include bedrooms, living room, bathrooms, and kitchen.

Where do you begin? A good place to start is in the bedrooms, how many? Are you in a family-oriented market? A one bedroom unit is going to be harder to rent. In addition to how many bedrooms you should buy, you want to consider the size. If you have a two bedroom house or apartment but the secondary is more of a glorified closet, you might as well have a single bedroom unit. What size would be appropriate? The answer to this question depends on your area. For instance, one area I invest in has 100 square foot bedrooms as a minimum, but that could be considered small in many areas. Another thing to consider along with bedrooms are closets, does each room have its own? Are there any walk-in closets? Some final thoughts on bedrooms - pay attention to their location to the rest of the house and consider whether you are going to rent or flip the property.

In real estate, there are two rooms that can make or break an investment - kitchens, and bathrooms. Each of these areas sees a lot of activity and have the most permanent fixtures. Location of each of these rooms is critical to your success. They can predict vacancy levels and overall rental price. At least one bathroom should be easily accessible and it is common to have one bedroom with a private bath. Older homes may have a one bathroom situation where you must go through a bedroom to get to it. This makes for awkward situations with guests and can equal problems. Let’s just say this, if you walk into the unit and think that is an odd placement for a bathroom or weird design for a kitchen, you should probably walk away or ask for a lower purchase price.

Look further at the kitchen, open the stove and refrigerator doors. Are they blocking doorways? This may not be as big an issue as the aforementioned bathrooms, but it can still be a problem. How big each of these rooms should be will again go back to area markets. Where we are, small starter units are quite common so I have no trouble renting them. Even so, your kitchen should be large enough to accommodate both cooking and eating.

Now let us take a look at living rooms, more to the point a lack thereof. This room is crucial if you are in a market saturated with families. When large buildings are split into multiple units, often the living room is sacrificed, at least a formal space. It really does not matter why this occurred. Personally, I would pass on the deal for units without one. Families are going to avoid renting from you, and those who do overlook it may not be great tenants.

Purchasing a property involves several steps, and choosing a good layout should be at the top of your list. Not taking the time to consider the unit as a whole rather than just the ROI aspect, can hurt said profits. When this happens, your job as a landlord just got even more difficult. Research your area markets, learn who is looking for rentals and what they need. Purchase a rental property that has enough bedrooms that are appropriately sized for your area. Also make sure the kitchen and bathrooms are well placed, easy to access and decently sized. Finally, forget any properties without formal living rooms.