Does a Bigger Home Truly Equal Faster Equity?

[Andrew Gomez]

I am currently in the San Antonio Market and looking to buy my first Single Family Real Estate Property that will essentially be a house hack until i have all of the rooms rented in which i will remove myself from the master and return to my current stead.

However i am beside myself when making the choice to chase down a 3 or 5 bedroom home due to the fact that i am renting out each room i want to get the highest cashflow possible given that i will be managing the property myself. Does anyone care to shed some light on their experience with this type of situation? I do not want to get into a bigger investment and not have anyone rent from me however since i own a company already i do have the ability to pay out 6 months of vacancy. I have contacts currently from the local university which is where i plan to receive the bulk of my tenants as well. 

[Corby Goade]

This is completely market dependent. "Bigger" and "more bedrooms" aren't the same thing, and more bedrooms could be more valuable in one part of town and not so much a few blocks away. Generally, any property 4 units or fewer is going to be valued based on square footage, but there are diminishing returns the larger a house gets (with a few exceptions- notably, super high end properties).

For example- there is a corporate mega builder in my market and they build out subdivisions of hundreds of homes at a time. They build homes in each subdivision (same finishes throughout the entire sub) ranging from 3/2 and 1400sf up to 5/3 and 3000sf. The 3/2s sell for around $225/foot, while the 5/2s sell for $160/ft. The larger the home, the lower the ROI.