ROI is the only thing one should foucus on. Cash flow is second.

The rest is all for debating purpose.

In my market for SFRs, 3br and above are the best.  It all depends on the location too.  Simi Valley demands more rent than Oxnard, but you can get a house cheaper in Oxnard.

If 2BRs are the hot item, I'd look into finding units I could convert into mulitple 2BR units on the same lot or some duplexes.

In general, as Ken Jones has said a few times, SFRs are not the best investment.  Having multiple units on the same piece of land is the best.  If you have an SFR and it's vacant, you have 100% vacancy and loss of income.  If you have a duplex, triplex or quadplex and you have one vacancy you are at 50%, 33% and 25% vacancy and loss of income (respectively). 

Me, I have three SFRs and I know people with over 40 SFRs.  I'm looking to branch out into the 2-4 unit properties (since the regs get considerably different out here once you go over 4 units and in some parts very landlord unfriendly).  That's my target for next year is 1-2 new rentals, at least one a multi-family unit.

The answer may be in how ling it takes to sell the 2 bedrooms in your area, while you may be worried about returns in the beginning, at some point you will want to sell, and the future value of the 3 bedroom vs the 2 bedroom coupled with the time it takes to sell may change the decision you make now when calculating the total return throughout the lifespan of the investment.

John Marshall - FORE! - not an investor - yet!

Decide what do you prefer, Cash flow or Appreciation and plan accordingly.

NO HOA if possible...SFD rules the nest and will always be in demand. Anyone who can get a duplex, triplex or five unit is sitting on pure gold for retirement...if you can get a 3 over a 2, do so. Storage space is in demand

Look at the cap rate on each one. If you can command top rent for a two bedroom, but buy one cheaper, then that might be the way to go. Although only a check of the numbers will answer that. 

Depends on the market. If it is school driven then 3 and 4 bedrooms, young people 2 bedrooms, or short term resort type area rentals 1,2, and 3 bedrooms.

We are presently investing in condos and like that they are all together and there is an HOA looking after things.

John - take a look at my recent post Should I Buy this Home as an Investment Property, it might help.

We direct our clients to 3/2 whenever possible, unless a condo at the beach; then 2/2.

John Marshall - FORE! It depends on the locale. No two bedrooms except for apartment buildings. Sam Shueh has this one.

Doesn't matter as different areas offer different types of deals.

I like 2-4 family buildings. With a single the loss can be great if that tenant stops paying or moves out. 

This will vary by market.

Garden apartments with 100 units or more are better investments in our area.

It depends on the location. 

Sam Shueh nailed this one!

So many different factors to consider.

Location.

Cash flow versus appreciation.

Personal goal.  

Four-plexes are a good investment in many areas, easily managed and in areas that have good ROI on single units the four-plexes are often golden.

I have Two 2 bedrooms and they rent well; but I love my duplex. 

Not an investor, sorry.

It depends on many factors.

My first choice is always timberland property, but for residential investments I have by far my best returns on 1 and 2 bedroom units, anything larger generally does not do so well.

John,

Each market place is uniquely different, what works well here are rental in one of the best school districts.  A

Hi Jon - If 2 bedroom homes are significantly cheaper right now, and are getting good rent, there might be a good appreciation upside - they've really gone up in value in our market.

It really depends on the particular market. See Joe Pryor 's answer!

This is one of those things where you have to look at each property on its own merits.  And it's a super hyper-local calculation that can change over time!

great guidance from Joe Pryor ....common sense direction....