Rental Property Per Bedroom Profit

Rental Property Per-Bedroom Profit

Viewer’s Question: Besides increased in rent, is there any other benefits to number of bedrooms? Either having more bedrooms or less bedrooms?

Well, there’s huge benefits, actually. So once we get past three bedrooms; that really is kind of the magic number. So three bedrooms and above, vacancy goes way, way, way down. And vacancy is the most expensive thing that rental property owner is going to face. So if you can, and I know it’s not always possible, strive for three bedroom places. The fewer the bedrooms, the more vacancy goes up.

Studio would tend to have very high vacancies, so you would expect the tenant would probably be moving out at the end of their lease each and every time you get them. That means you’re going to have to get into the unit, you’re going to have to refresh it and make it tenant ready. You’re going to have to market to find a new tenant, and the expense and the time that’s involved with those processes. And then you’re going to be vacant for a certain amount of time until you secure a new tenant.

+One bedroom, the end of that goes down. Two bedrooms – we typically see that tenants stay around three years, just a little bit over three years. But the dynamic we see once we get past three years or even more is that roommates are kind of replacing themselves. So, a roommate will be moving on to their next phase of their life and they’ll want to get out of the lease. We’ll let them out of the lease with the other roommate’s permission, and then the other roommates will actually find themselves a replacement roommate, which will put on a whole new lease. Eventually, that replacement roommate becomes the last man standing and that individual replaces all the roommates. So yeah, there’s a huge, huge, huge benefit to having three bedrooms or more. If you can do it, I definitely recommend it.


Joe White

Joe White is a Philadelphia Property Manager and Real Estate Broker. He is the owner of Grow Property Management and has been involved in the management, sales and purchases of Philadelphia area rental investment properties since 2008. He is an author and works as a real estate investment consultant and construction manager.

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