Which house should I buy to RENT out??

Here is a pretty noobie question:
I have 2 houses, in the same neighborhood, about 2 streets apart.

  1. First house, is smaller (about 1100 sq ft), 3 bd/2bath, brick, selling for $50K. Rehab to make it RENTABLE is about $15K. Total cost: 65K
  2. Second house, is bigger (about 1500 sq ft), 3 bd/2bath, brick, selling for $67K. Rehab to make it RENTABLE is about $10K. This house is about 10 years younger. Total cost: 77K.

The comps for the neighborhood is about $110s. BUT the rent for the neighborhood is about $1050/mth. Price per sq. footage is virtually the same at about $45 per sqft.

My question, since my strategy is Buy, Fix, RENT. Does it make sense to buy the bigger house for $12K (based on Total cost) more, when the rent is will pretty much be the same??

Also, how much should I care about resell comps for ARVs if I plan to RENT?



I would always recommend buying a house you plan to hold for CASH FLOW. I would buy the smaller house.

Kevin Amolsch

You may what to consider buying the larger home, & the smaller also, see if you can lock the other home up for 45 days to flip to investor, are do a lease option with the present owner at that sales price & sale your option for a much higher price are depending on your market do a concurrent escrow ( double escrow). us those funds for re-hab the home your going to keep, out side of these suggestion you do have several option with this. good luck

I would buy the larger property as your 12k higher costs now will yield you much more when you go to sell it eventually.

Chris :beer

Another consideration is that the larger house will be easier to rent for the price (better value to the tenant). A rental that is empty has negative cash flow. I would be hesitant to buy the smaller house and expect to get the same rent as the larger one.