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What makes the best rental property?

3 min read
What makes the best rental property?

The one that makes the most money! I know, I know - I'm due for a "thank you, Captain Obvious" for that response.

It's a valid question, though, and one we get from many folks that are interested in investing in residential real estate. The answer can have many facets - price point, neighborhood, building type, age, etc. Over time, we will re-visit each of these other facets of rental property selection, but today we will focus on the house itself.

If I could design my perfect rental home in Austin, it would be a 3 bedroom, 2 bath single story home between 1,400 and 1,800 square feet, built in the last 20 years.

Why come? Let's examine the various elements outlined above.

  • Single story: cheaper to maintain & operate, generally more desirable, and less wasted space.
    • Two story homes in Texas and other hot climates really need 2 HVAC systems to properly cool the home. Damper systems help but are not perfect. So your options are either 1) be miserable in the Summer upstairs, 2) use an inefficient damper-based system that requires more repair expense or 3) have 2 HVAC systems (expensive!)
    • You can put a single flooring type (luxury vinyl plank, please & thank you) down throughout the entire area and forget about flooring for 10+ years
    • No 2nd story plumbing leaks wreaking havoc on the downstairs finishes
    • Relatively easy attic access to all of your duct work and mechanicals
  • 3 bedroom / 2 bath
    • This satisfies the broadest spectrum of housing demand. Works for singles, families, roommates and many other resident configurations
    • Does not directly compete with apartment communities (I don't like competing on price with people whose pockets are 100x deeper than mine)
    • 1,400-1,800 square feet
      • This is the sweet spot size for a single story 3/2. Below 1,400 feet and the rooms start feeling very cramped, you have a galley kitchen or space for about 4 hangers in the master closet. While I don't have an issue with a 3/2 larger than 1,800 sqft, generally the price point relative to rent income make it a non-starter
  • Built in the last 20 years
    • No popcorn ceilings!
    • Real master bathrooms
    • Relatively open layouts

So there you have it - my dream house. Let's go find one for you to buy!