Why 3/2?

Question

As I'm doing my research, I see that 3/2 is kind of the bread-and-butter SFR. That's what I've been looking for as my first property, but just got to thinking today...I don't really know why I'm looking at 3/2 specifically. Why not 4/2? Or some other combination? I'm considering investing in something that I don't fully understand. Help me understand it BP!

Note that I've done a fair amount of reading on the difference between multi-family and SFR and understand that pretty well. But now that I've narrowed my target to SFR, I want understand why the 3/2 sub-category, so to speak, is the most popular as opposed to other configurations.

Bryan L. · Answer

@Scott Thompson - If you are only searching for 3/2s, then you may be missing some great deals.  Many houses (especially REOs) are often listed incorrectly in the MLS.  Also, there are often houses where a good rehabber can add another bath-room.

Wendell De Guzman · Answer

2/1 is not good as a rental because it tends to attract short-term tenants.

3/2 is good because it attracts long term tenants and generally, it's also a good re-sale property.

4/2 is primarily re-sale and not necessarily cheap enough as a rental.

Having said this, the above is a generalization and there are exceptions in every market.

Abel Vazquez · Answer

Hello @Scott Thompson .

I think Account Closed is on the money on how each category is different.

To add to that I think 3/2 are more profitable because it attracts families for tenants. Usually I think these people will take more care of the home and will be more responsible as far as paying the rent and all that good stuff. In addition to that if they chose not to buy a home or are unable to if they like the home they are likely to stay there for a really long time. Hope it helps

Jay Y. · Answer

I like going for a blend. Big fan of diversification.

2/1 less people living there, less wear and tear. Probably more transient. Some cases, just husband and wife, or young professionals starting out.

3/2 as mentioned above, bread and butter. Mostly for families... hopefully longer term tenants.

4+ cash cows (high rent)... However, I budget more $$$ for maitenance reserves, and to make rent-ready for next tenant. Usually 4+ means lots of kids!

Brant Richardson · Answer

As the others have said, 1 or 2 bedroom units tend to have shorter term tenants.

My goal is to have 3 or 4 bedroom homes in nice areas with good schools. The idea is to have a stable family move in and stay there while the kids go to school, hopefully K-12 and beyond.

4 bedroom places may not rent for very much more than 3.  They cost a little more to maintain- bigger roof, one more room to paint, another room that needs new carpet, a little more property tax.  They cost a little more to buy in the first place.  With that said, a 4 bedroom house would be very desirable for a larger family.  If you can find a 4 bedroom that fits all your other criteria and is priced similar to 3 bedroom places you should grab it in my opinion.

These families will be frustrated with one bathroom.  Ever tried to get 3 kids ready for school with one bathroom?  As mentioned, one can be added. If you find the right property where it can be done with out too much difficulty, like in the basement, then you have quickly added value.

Jesse Sumner · Answer

In my experience, homes with 2 bathrooms are the easiest to rent. For the modern family one bath homes are functionally outdated. They can be rented but my 3/1 are slower to rent and do not command as much rents. Therefore, most investors try to buy a 3/2 or 4/2. The rest usually comes down to the area your want to be and/or price you want to pay.

Good Luck!

Why 3/2?

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