There Is No Best, and Here’s Why.
When considering houses to buy as an investment rental property, you likely have considered how big a house to get. What is the ideal size for the rental market? You’ll often hear the 3/2 described as the ideal family home, but the truth is this is a dated notion. The rental market is diverse, and any size home might be the right fit for a great tenant or family. Consider the following:
Tenants come in all sizes.
Tenants and families are not all parents, 2.2 kids, and a dog. Tenants and families today come in a wide variety, from just out of school professionals to working-class families. Your single, recent grad isn’t going to need more than a 2/1, whereas some very large families may need to scale up to a 6/3. A single parent family with one child, however, might want or even need a smaller place. To that end, it’s important to keep in mind that the price of rent and a tenant’s income are also essential issues for many renters. As such, many renters can be driven by cost alone. The truth is that there is a need for all sizes of houses and no such thing as a “best” house when it comes to size.
People don’t use all that space.
A study published in the Wall Street Journal several years back pointed out something interesting: Americans don’t actually use all the space in their home. Residents in a home tend to congregate in specific areas (i.e., the living room) leaving other areas unused for large stretches of time, such as a formal dining room or sitting room. The average home in American right now is over 2,500 square feet. Forty years ago, that average was smaller by about 1000 square feet. All that extra space costs more to keep up and, again, it’s not necessarily for everyone.
Some people like smaller homes for environmental reasons.
A home with a large footprint comes with something else big– its impact on the environment. A new generation of renters have grown up with more focus on being green. This isn’t about the tiny home craze or getting homes entirely off the grid but about a middle ground for the average, conscientious individual. A family may find they can do just fine in a 2/1 if it means having a smaller impact on the environment.
So, don’t get tripped up on the notion of the classic 3/2. Today’s rental market bears a lot of diversity, both in structure and outlook. Whichever type of home you choose to go with, chances are there will be a quality renter who thinks that home is just the “classic” they need. Remember, too– the size of a property or the number of beds and baths in it do not dictate that investment property’s cashflow OR return.
People have different opinions.
There are also a number of culture differences to consider when it comes to living quarters, homes, and space. A co-worker once shared a story about her grandmother visiting from Greece. Grandma looked at the suburban neighborhood where my co-worker and her family were living and gasped, “Why are the houses so big, and why are you all so far apart?” Her grandmother found it bizarre, clearly preferring the close quarters of how she grew up. Understand that there is something for everyone. While some may idealize the 3/2, to others the question might be “why’s everybody so far apart?”