Would you invest in a 3 or 4 Bedroom???

[Kel S]

We looked at 2 houses today.

The first one:

One was a very small (780 sq ft) 3 bedroom. Build 1940's. The living room was tiny...12 x 11. Then 3 small bedrooms - 12 x 11, 10 x 9 and 10 x 8 and 1 bath. Beautiful new 1 1/2 car garage detatched. Excellent neighborhood with top schools in our area. Needs work though...ie; drywall, tub surround issue...possibly termites, looks like a couple old leaks area on the ceiling in one bedroom but roof looks newer. No central air.

The second one:

Large house (1640 sq ft) 4 bedrooms. Built 1920's. Living room, formal dining, kitchen and breakfast nook off kitchen on main level. Upstairs there are 4 bedrooms, 1 bath and a bonus room that is darling and gives you the feeling of being in a tree house :mrgreen:. Full finished (w/carpet) basement. One car garage. Great neighborhood...not quite as nice as the first house but the same excellent top school district. Needs very minimal work...some new carpet and paint. No central air. Not crazy about there only being 1 bathroom (upstairs) for this sized house.

Both houses are REO's and the banks are asking the same price for each of them. In the 40's.

Now my question is for all you investors. Which house would you want to have in your rental line up? The smaller one that you probably could pick up for less money but will have to fix quite a bit. Or the larger one that you will probably have to pay more for but less work on it.

Also another question; Which house do you think will rent easier? Obviously the larger one would be a higher rent but it's a big house and the utilities will likely be higher for the renters. Any thoughts? Is smaller (less rent) sometimes better? Would you be nervous to buy the larger one because of the size and possibly narrowing the rental pool of families looking for a house that size?