SIZE MATTERS!!! In Real Estate Investing

Size isn’t necessarily important in all things, but when it comes to real estate investing, bigger is better! More bedrooms are better than less bedrooms. Example, a 3BR property will draw more attention typically than a 2BR will. More baths are better than less baths. Many investors will install an additional half or full bath when rehabbing (especially if they can place it on the entrance level) as this become a convenience in place of going up or down to use one, as well as is a great selling item.

Larger closets are better than smaller ones, larger windows, letting in more natural light, are better than smaller windows creating a darker interior appearance. Larger bedrooms, larger kitchens, a larger garage, or larger yard, more square footage, all of these are normally better than their smaller counterpart.

There is nothing wrong with purchasing a property to flip, or hold, that has smaller parts to it, however, be wise to include within the rehab budget allowance for making those smaller items – larger. If you buy a 2BR property that is at least 1000 square feet, chances are you could convert it to be a 3BR property, although it might take some reconfiguring of interior walls to make it happen.

A good rule of thumb when flipping is to not purchase a property under 1000 square feet in size (interior living area). Dropping under 1000 square feet can make the property feel small, make the rooms feel small and probably not supply that open feeling that many buyers like to encounter when shopping for their first, or next home.

Allow room in the rehab budget to enlarge closets, enlarge baths, enlarge porches, etc. as these are important items to potential buyers.

I am not saying that smaller will not sell, however I am saying that larger, in my opinion, will sell faster, and from an appraiser’s point of view, pull a higher value (more square feet).

If you are seeking a larger feel, without creating additional square footage, consider these options: Paint the interior walls and ceilings a lighter color, as this will supply the appearance that the rooms are larger. Consider creating a coffered (raised) ceiling, as this will make the ceiling height feel higher and the room feel larger. Enlarge the window openings to let more light into the rooms as this will brighten the rooms and supply a feel of larger, when in fact it isn’t. Finally, install lighter colored flooring (tile, wood, carpet) as this will also supply a larger feel to the rooms.

The use of darker colors often makes the room feel smaller and darker. Try to avoid the use of darker colors if attempting to give the impression of larger areas, and if used, use the darker colors in limited areas, such as an accent wall in a sizable room.

Experience has shown that size matters when investing in properties, so consider this when looking at potential purchases and when creating the scope of work and rehab budget, because if bigger sells faster, then you, as the flipper, get to the closing table and get your paycheck faster. If bigger pulls higher rents than smaller, then you will experience greater positive cash flow as a landlord.