Imagine you’re a brand new investor who just sent out your first batch of yellow letters and you’re eagerly waiting for the phone to ring from that first motivated seller who’s willing to sell his house to you at a rock bottom price.
But what happens when that first call is a seller with a two-bedroom condo, or a two-bedroom house? What should you do? Well, if it’s a condo you should definitely walk away. (Even if the property has more than two bedrooms.) Condos have outrageous fees and you have to deal with the association too. Both of these eat up cash flow and are a pain in the butt.
However, if the call is from a seller who owns a two-bedroom house, I would still advise you to walk away from the deal, no matter how badly you want it. Trust me, when I was first in this business I remember how I was willing to do almost anything to get a deal.
But take it from me…
As someone who made a mistake early on that it’s much tougher to get rid of a bad deal once you acquire it and you can often be stuck with it for years.
You see, the reason you don’t want to purchase two-bedroom properties is because families don’t really want to live in them. Obviously, because they’re too small for a family of 4 or 5.
And since families don’t want to live in your place you’re going to attract single people or couples – both of these groups tend to be more mobile and move around more frequently. Whereas, you can get a family to stay in a three-bedroom house for years at a time. (I have many of these.)
But it’s unlikely…
That a couple or single person is going to stay in your two-bedroom property for any great length of time. Of course, this increased turnover means more money lost on vacancies and also more money spent on paint and carpet every time you have to fix up the property.
I was recently reading a book on successful business people. The book said that all successful people have one thing in common: They are extremely disciplined.
If you want to become a successful investor who consistently makes six figures a year, you have to develop and uncommon level of discipline. You have to be willing to walk away from 99 two-bedroom properties and wait for the one killer three-bedroom deal that will pay you solid cash flow for life.
I realize this isn’t what you want to hear as a new investor who desperately wants a deal. But take it from someone who’s been in this business for years. Almost nothing good can come from you buying a two-bedroom house.