Size does matter when it comes to Memphis investment properties. The average size of a new home has more than doubled since the 1950’s and people have grown accustomed to more space. If an investment property is too small, it usually is more difficult to rent or sell. When I say that price does not equal calue when bying discounted investment properties, this is one of the "other" factors I mentioned that an investor has to look at. Does that mean you should avoid small homes?
At MemphisInvest.com, we consider anything less than 1,000 sq. ft. to be “small”. We rarely recommend the purchase of an investment property this size. However, on occasion, it may make sense if the location is desirable and the house size is consistent with the neighborhood. After rehabbing hundreds of homes over the last few years, MemphisInvest.com Rehab Services has come up with a few ideas to make small homes seem bigger than they really are.
- Change the layout. Look for walls that can be moved or taken out completely. Usually, the best place to do this is between the kitchen and living room. Changing the layout of the bathroom and kitchen to maximize space and functionality is also a good idea.
- Push out and up. This is ideal if there is a second floor or a room with low ceilings. You want to push the walls out and the ceilings up. Vaulting the ceilings can completely change the feel of a room and help those who suffer from claustrophobia.
- Use nicer finishing materials. A small house can be a negative, but one benefit is it should cost less to rehab. It is simply cheaper to paint a 900 sq. ft. house compared to a 1,800 sq. ft. house. Therefore, you may have additional room in the budget to use on better light fixtures or appliances. A few extra sizzle features will grab the attention of the potential buyer/renter and take the focus off the size of the house.
- Staging. This strategy is more appropriate when doing a retail flip but studies have shown that houses that are staged sell quicker and for a higher price compared to homes that have not been staged. Keep it simple and don’t use bulky items. Once again, this helps to take the focus off the size of the house.
For most real estate investors, your focus should remain standard size homes that are more sellable or rentable, though if the circumstances are right and you are willing to go the extra mile (or have Memphis Invest Rehab Services help you) small homes can make big profits.