Larger Homes And Apartments Are Ideal For A Rental Property

When you are looking to rent out apartments and invest in the rental property market, you will find that most towns and cities have a number of options. It can be hard to know which properties are best and which will offer the most profit potential. Smaller properties and complexes with a number of small single units can be very appealing if you just look at the amount of rent that can be generated in a single month, but there is more to consider than just the potential bottom line.

When you are looking at studio apartments and one bedroom apartments, one thing to keep in mind is that these units are often rented for much shorter terms than larger apartments. There are a number of reasons for this, but many people in these units end up moving to larger spaces when they enter into relationships and start having families. Studio apartments also tend to attract tenants with minimal income, which leads to a higher instance of people who are unable to pay their obligations and to serve out the terms of their lease agreements. While not all tenants fall into this category, the incidence rate is certainly higher with smaller units.

When you purchase larger apartments and even standalone homes, you will find that you attract a different type of tenant pool. These spaces often attract families and couples looking to start families. When you have a rental property that is ideally suited for a young family, you will find that in many cases, these tenants will stay for years until their families grow too large or until they are ready to purchase their own home. This increase in retention ultimately means fewer months with a vacant unit and a greater overall income pool.

When you stop to think about these facts, it becomes apparent that larger units may actually be the key to making greater returns. While you will find that more small units can generate more revenue that fewer large ones, the level of retention is much higher, the incidence of missed rent payments is much lower, and the need for maintenance and repair is often significantly lower as well. Neighborhood and purchase price should still be considered, but in many cases you will find that in the long run choosing larger properties is the more profitable way to invest in rental property.

By: Ken Boutilier

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Ken Boutilier is an Atlantic Canadian based real estate investor, trainer, speaker, consultant and entrepreneur who has combined his knowledge of real estate investing and Internet marketing to train and teach others how to increase their cash flow through successful real estate investing. Learn more at Real Wealth Atlantic.