When investing in rental property, it’s important to consider every factor that can have an impact on the success of your rental.
Some people say it’s all about “Location, Location, Location!” and stop there. Others, more wisely, will consider location among other factors including: Year Built, Schools, Amount of Bedrooms, Tax Rates, HOA Fees & Restrictions, Closing Costs, Insurance, Property Management, and Leasing Fees.
So, how big of an impact does the number of bathrooms have on a home’s rental rate? And, in turn, on you ROI?
We’ve gathered data via FMLS (First Multiple Listing Service, a local MLS) using the following criteria:
- 3 Bedroom Homes
- Leased for $800-$2000
- Leased in 2013
- In Barrow, Cherokee, Cobb, DeKalb, Fulton, Gwinnett, Hall, Henry, & Walton Counties; essentially all of Metro Atlanta.
In reviewing the data, DOM (days on market) seems to be unaffected. However, it’s abundantly clear that the number of bathrooms in a home has a direct impact on the rental rate.
MORE BATHROOMS = MORE RENT
Two investors purchase almost identical homes in the same neighborhood.
Investor A’s home is a 3 Bedroom, 2 Bath house.
Investor B’s home is a 3 Bedroom, 3 Bath house.
All else being equal, “Investor B” can expect to collect approximately $1230, compared to $1193 for “Investor A”.
That’s a 3.1% increase. It may not sound like much on the surface, but in this example “Investor B” is walking away with $37 more per month, and $444 more over the course of a year.
So, when shopping for your next home, consider more than ‘just’ the: Location, Year Built, Schools, Amount of Bedrooms, Tax Rates, HOA Fees & Restrictions, Closing Costs, Insurance, Property Management, and Leasing Fees.
Consider the amount of bathrooms.
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