Luxury SFR rentals vs. Low end SFR rentals

[James Park]

This thread is a spin off of "Buy 1 rental home or 3 rental homes" I was wondering if any of you in BP nation own one or multiple higher end SFRs in very nice areas? or even focus on higher end SFRs as your stategy in emerging real estate markets?

In the Atlanta market, any homes in the $350,000 - $600,000 range is considered to be in the luxury market. By higher end rentals I mean rents in the $2000 - $4000/month range. By accident (a home purchased to live in, but became a rental property), I own one SFR rental in a high end neighborhood which rents for $3000 month which has been rented to the same tenant for 7 years now.

This is my opinion between high end SFR rental vs. lower end SFR rentals and I would get some feedback from other BP members. I think the biggest risk of a higher end SFR rental is the vacancy factor, but once you capture that "A" tenant they will most likely stay as your tenant for a very long time. I am assuming with apartments, MF, and lower end SFRs, you will have more turn over, more maintenance cost, but your CAP rate will be higher and you will have more diversification as one empty lower end SFR doesn't sting as bad as a higher end rental. I would think that you have greater appreciation on a higher end SFTs than you would with a lower end SFR.

The areas I target don't have any apartments or Mulit-family so i have no choice but to invest in SFRs. Today, I try to look for the cheapest SFRs in the best high school cluster in Atlanta.

I wanted to get some feedback from other BP members who rent out homes in the luxury neighborhoods vs. lower end SFRs price at $100,000 with $1000/rent. Which have you found to be more profitable. I think that every new rental property you take on can add additional financial risk.

Personally for me, I rather own 10 $300,000 SFRs than own 30 $100,000 SFRs with 30 tenants. I used to think of my tenants as customers before, but now I have a mind set of selecting good tenants like you would when you inteview a employee to hire for your own business. I would like to acheive my SFR investment goals with the least amount of tenants i possible can.

What are your thoughts?