Realtor · Oakland, CA and a Real Estate Investor with Multi-Family Units and a Self Storage Facility · Member since 2016 · 2k+ posts · 2k+ votes
What's easier to find renters for? a 4br or 3 Br or 2Br?
Some people say 3 Bd/2Ba is the ideal combination.
Others say you get more cashflow with a 4 bd/2,5 but you run the risk of higher vacancy because most of the time a 4 bd is when people are looking to buy instead of rent.
Still others say if you can buy a two bedroom for a lower price that has a "bonus room" or "office" that you can convert into a bedroom by adding a closet then that's even better because of forced appreciation.....then rent that out as a 3 bedroom 2 bath.
What's easier to find renters for? a 4br or 3 Br or 2Br?
Some people say 3 Bd/2Ba is the ideal combination.
Others say you get more cashflow with a 4 bd/2,5 but you run the risk of higher vacancy because most of the time a 4 bd is when people are looking to buy instead of rent.
Still others say if you can buy a two bedroom for a lower price that has a "bonus room" or "office" that you can convert into a bedroom by adding a closet then that's even better because of forced appreciation.....then rent that out as a 3 bedroom 2 bath.
What's been your experience?
By the way i live in the San Francisco Bay Area.
Hi Brian, I grew up in the East Bay :-)
As a manager, I'd always rather rent out smaller units. So, I'd vote for a 2 bedroom. The reason is the type of tenants and the amount of damage you can expect.
A bigger house will attract large families and sometimes in the Bay Area, that means multi-generations. That's a lot of wear and tear, and more maintenance calls to deal with, etc. You'll also possibly have parking issues with neighbors and that kind of thing. More pets, maybe.
And there is always a market for smaller, cheaper places. A two bedroom will give you a couple, or a couple with a child, normally. That will normally be less drama and less maintenance and damage.
Maybe a larger SFH will demand more rent, maybe they have kids in school and would stay for many years, especially if it's in a good school district - I don't know about that. I just know, that personally, based on my experience managing properties, that I'd prefer having smaller rentals. Less tenants = less problems. For what it's worth.
What's easier to find renters for? a 4br or 3 Br or 2Br?
Some people say 3 Bd/2Ba is the ideal combination.
Others say you get more cashflow with a 4 bd/2,5 but you run the risk of higher vacancy because most of the time a 4 bd is when people are looking to buy instead of rent.
Still others say if you can buy a two bedroom for a lower price that has a "bonus room" or "office" that you can convert into a bedroom by adding a closet then that's even better because of forced appreciation.....then rent that out as a 3 bedroom 2 bath.
What's been your experience?
By the way i live in the San Francisco Bay Area.
Hi Brian, I grew up in the East Bay :-)
As a manager, I'd always rather rent out smaller units. So, I'd vote for a 2 bedroom. The reason is the type of tenants and the amount of damage you can expect.
A bigger house will attract large families and sometimes in the Bay Area, that means multi-generations. That's a lot of wear and tear, and more maintenance calls to deal with, etc. You'll also possibly have parking issues with neighbors and that kind of thing. More pets, maybe.
And there is always a market for smaller, cheaper places. A two bedroom will give you a couple, or a couple with a child, normally. That will normally be less drama and less maintenance and damage.
Maybe a larger SFH will demand more rent, maybe they have kids in school and would stay for many years, especially if it's in a good school district - I don't know about that. I just know, that personally, based on my experience managing properties, that I'd prefer having smaller rentals. Less tenants = less problems. For what it's worth.
@Brian Garlington @Account Closed made some really great points. I know your post is titled "What's easier to Rent out for cashflow" but just also remember that a 3bd/2ba is usually easier to sell than a 2bd. When thinking about an exit, just keep that in mind too.
I hadn't thought about that aspect. Maybe I should have mentioned that initially I will live in the property (because of owner occupancy requirements with the VA loan) and have a tenant as a roommate......(Househack as BP calls it) Then after living there a minimum of a year I will move out, keep the VA loan in place and probably get an FHA Loan.
I like the idea of the smaller units for easier rental. I'm actually doing that right now with my condo. It's a 2/1 and I have a roomate and it's worked out really well and when i move from here I will rent out the entire condo.
@Brian Garlington @Account Closed made some really great points. I know your post is titled "What's easier to Rent out for cashflow" but just also remember that a 3bd/2ba is usually easier to sell than a 2bd. When thinking about an exit, just keep that in mind too.
Ryan, I don't know about that. There is also always a market for starter homes. And in the Bay Area, where homes are so expensive and demand is so high, I don't see that as a problem. Assuming the properties are in the SF Bay Area, anyway.
Brian, one other note: I'd avoid Oakland or Berkeley, only because of their rent control laws. I know a landlord in Oakland and it's becoming more cumbersome all the time. Not just the inability to raise the rent, but also more and more tenant protections. For what it's worth.
I think Concord is a great location in the Bay Area. People kind of forget it's there. But, the location is great, and the prices are lower and the crime is really low. BART is there and it's right next to Walnut Creek, where people can go do the upscale thing for dining and shopping, without having to go to SF.
Sue Kelly I have been keeping my eyes peeled on Concord myself. I currently live a block from downtown Walnut Creek and am new to the Bay Area overall from AZ. While WC is absolutely great and the downtown is really cool, the prices are just outrageous. There is a 2/1 around 1,000sf for sale on my street right now for $900k. Unbelievable. You can get the same thing in a decent part of Concord for around $375k. Also strongly considering Oakley/Brentwood. What area are you in specifically?
@Account Closed I hear you on the exit strategy and how it relates to a 3/2 In fact I did a search for 2bd Single Family Homes and not to much shows up at all. It's probably a matter of what the numbers work out to. From an exit strategy standpoint what will I be able to get regarding net cashflow as a rental compared to what I paid for on expenses and for both the 3br or a 2 br.
To your question, it doesn't work that way, each market is different as to housing demand and price points will vary as well. A 4bdr should rent for much more in a price band than a 2bdr, that reflects the issues Sue mentioned, real estate is a people business, it carries social aspects so know who your target market might be as well as the demand. :)
"Sweet Spot" I'm looking in is Antioch, Pittsburg, and Baypoint. Seems like lots of C+/B- neighborhoods with higher rentals. Look on Craigslist and Rentometer and you get a good idea what places are renting for. The key thing is to go look at the neighborhoods as well. Brentwood and Oakley and Discovery Bay seem just a little to far out and BART doesn't look like it will go out that far.
I saw some multifamily in those areas where the numbers seemed to work after talking to the agents and calculating Vacancy, taxes, Ins, Capex, and Repairs, but as for living there it seemed like a C-/d+ area because of the neighborhood and I certainly wouldn't want to live there either.
So true. Just an example -one of my best friends is Filipino. She married a white guy who fortunately finds her culture and massive extended family charming lol. They bought a 5 bedroom, I forget how many baths, house in Fairfield on short sale during the crash. Got a million dollar home for half the price.
That home is constantly packed. They are a two adults, two children family. But, her mom lives with them (dad did, too, until he passed away), her sisters and their kids are constantly there, her brothers, her cousins, visiting relatives from the Philippines who stay for months on end...
Great people, but they pretty much take up all the parking on the block lol, let alone can you imagine what it would be like to turn over that place if they were your tenants? Yikes!
They started out in his 2 bedroom duplex in Fairfield (he only owned half of it), and she kind of hated to leave it, since it kept everyone from moving in LOL. Now they rent out the duplex.
@Brian Garlington Are you looking for single family to purchase as primary residence and turn into rental down the road or just purchase it as an income property right off the bat? Or multifamily? I'm personally looking to use the BRRRR method on a single family detached.
Sue Kelly I have been keeping my eyes peeled on Concord myself. I currently live a block from downtown Walnut Creek and am new to the Bay Area overall from AZ. While WC is absolutely great and the downtown is really cool, the prices are just outrageous. There is a 2/1 around 1,000sf for sale on my street right now for $900k. Unbelievable. You can get the same thing in a decent part of Concord for around $375k. Also strongly considering Oakley/Brentwood. What area are you in specifically?
I grew up in the East Bay Area, grandparents in Oakland, we lived in San Leandro, cousins in Concord - blue collar people. I now live way up north on the coast in Del Norte County.
I think what keeps Concord affordable, is that the schools aren't fantastic. They're not horrible, but I think that's what keeps WC so much more expensive. And it's the uppity factor, too. People want to say they live in that zip code.
My brother bought in Antioch and unfortunately, that neighborhood went way downhill. Pittsburgh and Antioch are iffy, which is why they're cheaper. A little more money gets you into Concord, where there is way less crime.
Agree with Brentwood, although people are looking for anywhere closer than Tracy to commute from, really.
There's another forum that I can tell you about - assuming I'd have to PM it and not post it here. It's just about different areas and people answer questions about living there, etc. Lots of people asking about living in Brentwood on that forum. They're looking for something affordable, safe, preferably with decent schools and a commute they are willing to make to get those things.
Not sure if the Google or Apple buses go to Brentwood. If so, that would be a big help.
Great question. Two bedrooms are always good and you tend to get them rented quickly. I also find that these tend to have a bit higher turnover, as it is usually a roommate situation.
One reason I like 3 and 4 bedroom homes is that you will many times get long term tenants. If you are able to get a family in your rental they tend to have a bit more stability.
There are no bad rentals if you can get them at a good price and that the numbers make sense.
I'd like to buy a Multifamily that i would live in initially (while renting out the other unit(s) and then after living there at least a year, move out of it and convert all units into rentals. The property also can not need to have a lot of work that needs to be done with it because of VA Loan requirements. The VA loan I'm using is great because it's literally 100% Financing. However, the property needs to be in nice condition with little to no work needed upon moving in otherwise the VA won't "do" the loan. They have their own certified inspectors. I found out the hard way on two multifamilies in Oakland that I did offers on recently and they both had too many pest/termite problems.
For those reasons i have started to look at the areas I mentioned and I also started looking at SFR's...
Thanks my friend......I saw some 4br in Antioch/Pittsburg/Baypoint that really caught my attention. They were all at or under 400K and were all built between 1985 and 2005 and were in B to B-neighborhoods. However, as I was looking at them I had someone looking at them with me online saying no don't buy those 4 br's because you won't be able to rent it out because nobody wants to "rent" a 4 bedroom place in Contra Costa County....they want to "buy" 4bedroom places. Besides these places look "nice" and you don't want to eventually rent out such a "nice place" in a "B" neighborhood.
Personally i was a little surprised to hear this which is one of the reasons I put the question out here to the forum.
@Brian Garlington, there are some decent areas in Bay Point and Pittsburg especially the areas close to Bart station. I think they have plans to extend the e-bart to Brentwood but not sure when. With new E-Bart station in Antioch I think driving upto the station if you are in Discovery Bay or Brentwood will not be as bad as it was driving to BayPoint/Pittsburg Bart station.
@Brian Garlington I think I will have to do a colleague request to PM you that forum link. I'll do it now.
By the way, Richmond has some decent areas and more people are looking twice at Richmond because of the proximity to Oakland and SF. I grew up afraid of Richmond lol, but times change.
What's easier to find renters for? a 4br or 3 Br or 2Br?
Some people say 3 Bd/2Ba is the ideal combination.
Others say you get more cashflow with a 4 bd/2,5 but you run the risk of higher vacancy because most of the time a 4 bd is when people are looking to buy instead of rent.
Still others say if you can buy a two bedroom for a lower price that has a "bonus room" or "office" that you can convert into a bedroom by adding a closet then that's even better because of forced appreciation.....then rent that out as a 3 bedroom 2 bath.
What's been your experience?
By the way i live in the San Francisco Bay Area.
That something you should look in the demographical location, where the property is located, when I was a investment analyst for a hedge fund buying up multifamily, it was all about the demographic on the neighborhood. send me a PM and I would share more with you.
@Account Closed is correct that more bedrooms is just more people and more wear and tear. Three or four small children can destroy a home. Don't underestimate them based on size! I think the sweet spot is 3/2. It accommodates a family with two kids to each have their own bedroom. It also works for couples without kids because they will have a guest room and office. Two bedrooms is more likely to increase turn-over.
I really like Benicia. It's problem, though, is the stinky oil refinery and that it's not on BART or Amtrak, and if you drive you have to go over the bridge (cost, traffic, hassle). Martinez is a better location for commuting, as it's got Amtrak right in town in a safe location. It's got it's stinky refinery, too. Well, I guess they're not so stinky anymore, just ugly.