Saurabh Garg

Do you know that instead of buying a single 3BHK, the same budget could quietly get you two income-generating 1BHKs and a smarter investment outcome? The numbers, drawn from six major cities between 2019 and 2025, prove it is a structurally superior investment approach for high-demand urban markets.

The core argument rests on a simple but persistent fact: 1BHK apartments generate higher rental yields, and two of them together costs less than one 3BHK unit.

Growing yield gap

Across all configurations studied, a clear hierarchy emerges: the smaller the apartment, the higher the yield. According to reports by No Broker, 1BHK units averaged 4.16% annually against 3BHK units at 3%. Put simply, for every ₹1 crore invested, a 1BHK earns roughly ₹4,16,000 in annual rent versus ₹3,00,000 from a 3BHK, a difference of over ₹1,10,000 every year, just in rent, on the same capital. What makes this gap particularly notable is that it has been widening. In 2019, the 1BHK yield was 3.84% versus the 3BHK’s 2.92%, whereas the current gap is 4.16% for 1BHK and 3% for 3BHK. The return-to-office wave and post-pandemic migration toward employment hubs have driven a surge in demand for affordable, well-located 1BHK units, particularly in Bengaluru, Hyderabad, and Pune. Young professionals, students, and early-career migrants are choosing independence over shared accommodation, expanding the tenant pool for compact apartments at a pace that 3BHK supply simply does not match.

Capital cost advantage

Beyond yield, the strategy benefits from a structural pricing gap. On average, two 1BHK apartments in the same locality cost only 73% of a single 3BHK, meaning investors can deploy the same strategy for 27% less capital. The remaining funds can sit in fixed income, equities, or be reserved for a third property entirely.

This is not a temporary anomaly. Several structural forces sustain the 1BHK yield advantage. India’s 20–35 age cohort is at its largest in history, and nuclear family formation is accelerating demand for independent rental housing. IT migration corridors in Bengaluru, Hyderabad, the NCR, and Pune attract hundreds of thousands of young professionals each year, all of whom need a practical, affordable place near work. These tenants are in the majority and looking for a 1-bedroom apartment.

The 3BHK faces a different structural problem. Its tenant pool families and senior professionals are narrower, move less frequently, and negotiate more aggressively on rent. A 10% rent increase on a 3BHK in a Bengaluru IT corridor means ₹4,000–₹5,000 more per month, which tenants resist or use as a trigger to consider buying. The same percentage increase on a 1BHK is ₹1,800–2,600, far easier to absorb. This dynamic means 1BHK landlords reset rents to market rates far more often, particularly in rising markets.

Owning two units also provides built-in vacancy protection. A vacant month in a 3BHK means zero income. With two 1BHKs, the probability of both being empty simultaneously is substantially lower, and one unit continues generating returns during tenant transitions.

However, the two-1BHK strategy requires slightly more active management, two maintenance schedules, more tenant transitions and periodic repainting between occupancies.

Decision in practice

The 3BHK remains the right choice when the investor expects a specific infrastructure catalyst to drive appreciation, prefers a single long-term tenant, or may eventually occupy the property. For everyone else, particularly those building a rental income portfolio, the math strongly favours splitting up.

The writer is co-founder and CBO of NoBroker.

Published - August 07, 2026 05:32 pm IST