In my post “I Know You Have Questions”, I asked the readers of my site to send me questions or topics that they are just dying to ask or are confronted with often. John Gall asked: “If you could purchase only one property would you choose a 4 bedroom and skip 3 bedrooms or consider all looking for the best deal with the best cash flow or overall appreciation potential?” Actually John, I have two answers to that question:
My process always starts off with figuring out what neighborhood area I (or my customer) want to buy in and then what type of 
If I am wearing my financial hat only:
Once I have identified the top financial performers, then I review the MLS listings and pictures to quickly determine if this may be a property we want to see. If we see it and the condition, cash flow, and location are decent relative to the price, we buy it. We never talk about bedroom count.
Conversely, if I put my landlord hat on only:
I am mostly looking at the investment property features. In fact, I don’t own anything with 4 bedrooms and I prefer 1-2 bedroom units. I do have many 3 bedroom apartments and for whatever reason, those seem to be my biggest management nightmares. Without saying anything about the type of renters in the 3 bedrooms, it just seems like those units require more phone management time and more maintenance time. I have met some landlords that own 4 and 5 bedroom units and they agree that those size units take the most abuse (as you may have 4-10 people living in one apartment-legally).

At the end of the day, it is really a matter of personal preference. While analyzing the numbers is critical to your success, if you are not comfortable with the property or area, you should not buy it.







5 comments
#1John GallDecember 6, 2007, 2:03 pm
Once again, outstanding job on the reply. Thanks for putting that out there.
#2Scott FicekDecember 6, 2007, 2:09 pm
No problem. I could rent 1 bedrooms all day long. You usually get a single person or couple.
#3Chris LengquistDecember 6, 2007, 5:24 pm
The question seemed innocent enough but so much goes into the mixing bowl, as you pointed out. It’s important that newer investors work with either an experienced INVESTMENT REALTOR or an experienced investor when acquiring their first couple of properties.
Because even though all of what you said, and more, is true sometimes it just comes down to something only experience can notice.
#4The Property PunditDecember 6, 2007, 6:11 pm
Good point, Scott. I hadn’t thought about the different abuse the units might take. It makes sense…
#5Scott FicekDecember 6, 2007, 8:03 pm
Thanks guys. It is amazing how much bad information is out there. I have a bunch of people in Minneapolis trying to sell new investors $300k townhouses that cash flow negative $400 each month telling them they should take money out of their 401k contributions instead!
As you both know, you need cash flow to survive the toilets and the tenants!
Add your comment