So, if you are going to invest there, I think it best to NOT assume it will continue to boom as it has over the short term, make sure the deal makes sense today, and has some extra "insulation" to cushion you in case it goes bust so that you are not forced to sell or lose the property then.

You always want to take into consideration the market but in general that extra bedroom will usually nest that resident a bit longer.

As long as you increase rents on average by at least 3% per year, your tenants are paying for this little extra bit that I'm suggesting you might want to pay.What does this little extra bit do for you, for 30 year fixed rate mortgages with interest rates ranging from about ~3.5% to ~4.75%?

This is when extra payments make the biggest difference.  

I sent in all the permits last week for the complete gut rehab I will be doing in this house.

That may help you in terms of finding deals and perhaps making a little extra cash.

Specifically I am looking at buying either a 3 bedroom 2 bathroom house and renting out the two extra rooms or buying a duplex/triplex and renting out the extra houses.  

Even if you just throw the extra money in the mattress it is available to you at no cost.  

We have found that getting rid of the tv and hanging out with my kids in the living room has brought WAY more happiness than buying extra doodads. 

It's tight but we're working on moving out right now and it's awesome being able to count on some extra income when you move on.