Bread n Butter type of Property Mix

[Rodney Smith]

Hey all,

I'm curious to get some feedback from others, but from previous experience / talking with other investors it seems to me that 2/1 unit property mixes seem to be the bread-n-butter type of properties for rental income (assuming that i'm pursuing simple rental agreements using a property management company to manage the units .. i.e. not going after specific niche markets like student housing, etc.). There are a few reasons that standout to me for why this might be:

1) It seems that the extra rent collected by having a 3rd (and especially 4th) bedroom doesn't always proportionally add to the rent price relative to maybe a stereotypical price hike in buying a 3/2 vs a 2/1 (i.e. maybe a 2/1 rents for $750 and a 3/1 gets $900. Only $150 for a 3rd room.

2) I think that there is a large market of people looking to not pay more than absolutely necessary in rent, thus a 2/1 (although marginally cheaper) is cheaper than renting a bigger house, and better fits the budget for a larger demographic. I would wager this dynamic will probably grow in strength / validity over time as the economic outlook of things is (in my fallible opinion) probably more dovish than hawkish. If thats true then that makes these properties pretty marketable.

I'm sure there are a lot of variables at work in this thought process, but I'm curious to hear other peoples thoughts on this - Especially with regards to the Kansas City Missouri market which is one of my primary markets where i'm building my portfolio. It could very well be that i'm mistaken in this thought process as well, which is why i'm interested to hear other people's thoughts on this.

Thanks!

[Thomas S.]

I do not know your area but it is reasonable to assume that the majority of renters makes up the group of single, young couples or young families (1 child). This would be the largest demographic

group of renters making the 2/1 the most desirable units. This also translates into being easier to find qualified applicants

The 3/1 would be more attractive to older families which also means life long renters that are in my opinion a less desirable demographic and less caring in regards to your property.