Congratulations, you’ve finally built the courage and decided you want to be a landlord in Burbank. You even have the budget for it too. The question therefore is “not to be or not to be” but whether you should buy a one bedroom or two bedroom apartment. Some may ask what’s the difference whether you have one or the other. Well, a lot of difference and we’re going to tell you all about it.
Location, Location, Location
Sure, you’ve heard that real estate is all about location, location, location. Your choice of investment in a 1 bedroom apartment or 2 bedroom depends on the location you choose. In upscale areas a one bedroom apartment might cost the same as a two bedroom apartment in a mid-scale neighborhood.
This is especially true if the apartment you really like is near a park, mall, pub, medical center or school. Small families prefer the convenience of these amenities whereas single people can bear to do without.
Co-op vs Condos
Most of apartments in are constructed in co-operative societies or they are in condominiums. Your decision might hinge on the fact that co-ops do not allow subletting which you’ll be doing if you buy a one bed apartment for rental purpose. Condos on the other hand are much more flexible but then you’ll have to buy a two bedroom apartment instead, even if you wanted to buy a one bedroom.
You might find it interesting to know that due to the high demand for rental homes, one and two bedroom apartments are usually preferred due to their affordability. In a place where there is high population of working people, you’ll find that one bedroom apartments are preferred by single people while two bedroom apartments are popular choices for new families.
Commuting is one of the biggest problems for all regardless whether your prospective tenants have cars or not. So, if you happen to buy an apartment that is far off from the city center than the chances of it getting tenants are less. You can estimate this by just studying the population of either groups. If you don’t know how then just refer to a property management company near you.
It’s surprising how just one more bedroom can significantly add to the cost of maintenance for a landlord. Expect wear and tear, plumbing, paint job, water, taxes, and utility bills to be higher than a one bedroom apartment. Moreover, when dealing with tenants, expect a single executive to be more easy to negotiate with about these costs as compared to a couple with a kid. They’d be hard pressed for every penny so they’ll try to get you to pay off any additional charges, however minuscule. At the same time they’ll be the people who’ll be causing the maximum wear and tear. That said, you can always screen tenants before making the decision to let.
Finally, let’s talk about rental income. It’s obvious that a two bedroom apartment will fetch higher rent as compared to a bedroom one. However, factor in the costs, then you’ll see that you don’t earn much after all expenses and taxes whether you own a one bedroom or a two bed apartment. Instead, thinking of multiple stream of rental income from multiple apartments. This is where two 1 bedroom apartments make sense.
The type of neighborhood you plan to invest in also matters. Apartment prices in poor neighborhoods may seem attractive but they will fetch you less rent, as compared to an area where all the big shots live. They tend to take up apartments on rent as spare accommodation for whenever they are in town.
All in all, it all depends on what your goals are for buying a 1 bedroom or 2 bedroom apartment. At the end of the day you’ll have to ask yourself the tough question whether it’s all worth the effort.