|By Nel (Nel) on Friday, September 17, 2004 - 09:34 pm: Edit|
Hi all.... quick question:
Has Anyone Here Looked Into Purchasing A Home Near Your Student's Campus, To Rent Out To College Kids, & Maybe Even Have Your Kid Be In One Room, & Rent Out Other Rooms?
**If yes, any pointers on this?
Like, what is rent rate & do you have to check with Chamber of Commerce or local realtors about the feasibility of it?
**If no, why or why not?
(And for reference, I am thinking of a small town college; school is appx 2000 students, very small town (actually a village, homes might be in $100,000-$120,000 range for colonial with 3-4 BR and within walking distance to campus/quad; school tuition (private, lib arts) with Room/Board is $21,000/year).
(PS: We already own/rent a single 2BR home in our own home metro area; have done so for the last 21 years with no problem renting to singles or couples in that little house.)
|By Thedad (Thedad) on Friday, September 17, 2004 - 09:58 pm: Edit|
My main day job is that of real estate agent. It has worked out well for several of my clients. Now, part of it is that they have hit the appreciation jackpot over the past nine years.
I would be concerned if I thought there was going to be a general softening of the market. And right now the crystal ball is hazy and says, "Call back later."
|By Marite (Marite) on Friday, September 17, 2004 - 10:26 pm: Edit|
I think the situation in a small town with a small college must be very different from that in a large city. Chances are that most of the students live on campus, so it may be much harder to find renters on a steady basis.
|By Concerneddad (Concerneddad) on Saturday, September 18, 2004 - 12:06 am: Edit|
We are considering it if our son is accepted early to Tulane Med. and descides he wants to stay in N.O. for med. school.
|By Digmedia (Digmedia) on Saturday, September 18, 2004 - 12:38 am: Edit|
Someone advised me that if you are considering that (purchasing a home in the college town), then have your son/daughter purchase it. As a first-time home buyer, they can get a low down payment. You would continue to pay what you would normally pay for a dorm room. They would use that, plus income from a roommate to pay the mortgage. When graduation comes, they have equity in a house and a great credit rating.
|By Nel (Nel) on Saturday, September 18, 2004 - 08:57 am: Edit|
<DigMedia> -- That's an interesting thought. But, how could a, say, Soph College kid, with maybe a summer job only at the mall, qualify for a Mortgage Loan?
For the school my DD is at, I spoke with a gal, a Jr this year, & she said finding an off-campus place was soooo hard & so many upper-class were looking for that.
Does anyone have experience with the scenairo, & if it is too much headaches, damage, trouble, etc; or are screened tenant/college kids OK as tenants?
|By Dstark (Dstark) on Saturday, September 18, 2004 - 09:29 am: Edit|
Thedad, what do you see happening in the real estate market right now that is making you concerned? Is there an actual softening in demand?
Is supply increasing?
Nel, a friend of mine in the real estate business has been encouraging me to do this.
You should see if the numbers add up.
There have been some articles in the NY Times about this.
Here is one...
|By Fendergirl (Fendergirl) on Saturday, September 18, 2004 - 09:38 am: Edit|
at my college it's cheaper to rent out a house than it is to live on campus.. i don't know about renting out the other rooms though, most kids here rent out a whole house with their friends and just split up the rent..
|By Marite (Marite) on Saturday, September 18, 2004 - 09:51 am: Edit|
My S shared a college-owned apartment with some other students. The place was a veritable pigsty. These were not party animals, just young people (some men, some women) unwilling to do minimal cleaning. Some students, however, are heavily into partying and they and their friends can leave a trail of havoc in their apartments. Landlords have to be able to vet potential renters and clean and tidy after each set of tenants leave. As well, there needs to be someone to provide routine maintenance such as fixing leaky faucets, frozen pipes, flooded basements, etc... Something to think about.
|By Fendergirl (Fendergirl) on Saturday, September 18, 2004 - 09:55 am: Edit|
i live in a college-owned apartment and I love it.. i live with four other girls. If anyone wants to see pictures of my apartment let me know.. it gives a good example of what to expect
(i live in the biggest apartment on campus though, so i dont know how good of an image it is
my apartment is about five blocks off campus in this area with other college apartments.. its really nice
|By 1moremom (1moremom) on Saturday, September 18, 2004 - 11:09 am: Edit|
The local government can tell you what permits are required; they often have a website. In my college town there are different permits for renting rooms in an owner (your child?) occupied house vs. renting an entire unit. The permitting is more complicated for the latter. A realtor should be able to help you identify possible properties, including some that may already be permitted rentals, and give you an estimate of cash flow. One way to handle the concerns Marite raises is to hire an agency to manage the property. It will add to your expenses, but can alleviate a lot of headaches.
One caveat-- when I moved to this town fifteen years ago there was a shortage of student housing and renting was a sellers' market. In the last few years the university has built several new dorms and some private student complexes have come in. Now that classes are underway, I see quite a few privately owned "single family" rentals with For Rent signs still out front.
|By Midwesterner (Midwesterner) on Saturday, September 18, 2004 - 01:29 pm: Edit|
You should certainly check into the town's occupancy laws; do they have a limit on how many unrelated people can live in a single dwelling?
|By Dstark (Dstark) on Saturday, September 18, 2004 - 01:52 pm: Edit|
1moremom, which campus are you referring to?
Don't want to invest there.
|By Elleneast (Elleneast) on Saturday, September 18, 2004 - 02:30 pm: Edit|
"You should certainly check into the town's occupancy laws; do they have a limit on how many unrelated people can live in a single dwelling?"
Very good idea. I live within a few miles of Villanova and the town has really cracked down on the number of unrelated people allowed to be living in the same dwelling. Buying to rent is probably not the investment that it once was in the area. The locals have pushed for tighter regulations and enforcement with success.
|By Barrons (Barrons) on Saturday, September 18, 2004 - 08:29 pm: Edit|
i'd stay away from the student areas and look where the faculty live. Better resale and some will prefer the quiet--better tenants
|By Thedad (Thedad) on Sunday, September 19, 2004 - 04:20 am: Edit|
In LA, living where the faculty live will be nigh impossible for many/most families.
Dstark, I hesitate to project from local experience. But there is definitely an increase in supply. Whereas three months ago Buyers were panicked and wrote offers on the first thing that fit, now it's "Gee, this might work, but let's look at another 20 houses."
A small case study: House A sold for $851,000 with six offers. House B next door has a family room, an additional kitchen, and an updated kitchen, listed a week before House A closed escrow. Listed at $895,000 (see all the plusses), not a single offer.
To be remotely on topic, House A was owned by a professor at UCLA, transferring to U/Chicago.
|By Backhandgrip (Backhandgrip) on Sunday, September 19, 2004 - 08:03 am: Edit|
My aunt did this many years ago. She is now, sorry.She bought a brownstone very near Drexel University, on a frat row and the U. ended up buying it from her a couple years after purchase. Sorry, I do not know any details although I imagine she wanted to get rid of it as the upkeep of 100 year old homes can be high.
|By Dstark (Dstark) on Sunday, September 19, 2004 - 11:10 am: Edit|
Thedad, in three years, I was thinking of buying a condo in Westwood and having my son and a couple of roomates live there.
How much is a decent condo in Westwood?
How much can you rent it out for?
Like the person above mentioned, do students inevitably trash the place?
Of course, this scenario only works if my kid ends up at UCLA.
|By Alongfortheride (Alongfortheride) on Sunday, September 19, 2004 - 12:07 pm: Edit|
>>>My aunt did this many years ago. She is now, sorry.She bought a brownstone very near Drexel University, on a frat row and the U. ended up buying it from her a couple years after purchase.>>>
Backhandgrip brings up an interesting point here. I imagine that it happens more than we imagine, especially with many universities finding themselves out of space.
>>>In LA, living where the faculty live will be nigh impossible for many/most families.>>>
Thedad also brings up what I think is an important point. I attended college at a state university that was the focal point of the town and it's economy. The professors and administrators at the university lived in the nicest and priciest neighborhoods in the town. However, I did know one family that bought a great old two story house with 5 bedrooms that was about 5 or 6 blocks from campus. They had three stair-stepped sons at the school at the same time. Each son had a room, and they rented out the other two rooms to boys from their home town, so housing was much more affordable for them. As one graduated, they rented his room. Worked out great. Now, whether the numbers would have worked out the same way for them in this day and age, I don't know. The boys were from a family with a large wheat farming operation, so tightening a leaky pipe for them was no problem nor was general maintenance and painting. If they had not been able to handle such stuff that came up, I can imagine maintenance would have definitely been an expense to factor in.
|By Dannysmom (Dannysmom) on Sunday, September 19, 2004 - 12:45 pm: Edit|
I was a real estate agent and property manager in California up until 2 years ago. Dstark, you will have to have a long-term outlook with a rental there. It is pretty much impossible to rent for what your costs will be if you take a typical mortgage. Especially with a condo where you have maintance on top of your mortgage and property taxes. In many other places in the Country it is quite possible to meet and even exceed your expenses with a rental, but not CA.
|By Dstark (Dstark) on Sunday, September 19, 2004 - 03:03 pm: Edit|
Does it make sense to put more money down than typical?
Say something costs $400,000.
Would it work if you put down $200,000?
Or does maintenace eat you alive?
What is typical maintenace run a year on a $400,000 condo? $400,000 house?
With students around, you are probably doing a lot of painting and rug replacing.
|By Nel (Nel) on Sunday, September 19, 2004 - 05:57 pm: Edit|
Great input from everyone! :-)
For the small town example I am looking at, I am looking at $100-$120,000 for a house. Would it truly be feasible to have my daughter "sign for/buy" the house, even though she would be 19, with only a summer job?
We own our home 2 hours away, clear; and the rental I have (my home when single) is also owned clear. We could feasibly pay cash in full or maybe mortgage half (for tax purposes) the cost of a $100-$120k home. I would use tenant screening that I employ for my rental in my hometown, to ensure no Partiers or Slobs were considered.
Would say $300/month per kid in the house sound reasonable (9mos x $300 would be like $2700 in "Room", then kids have to split the utilities & do food). Is that in ball park for small town college rental, with maybe 4-5 kids in a house?
Would this then maybe work? My main query now is about having home in daughters name? Does that sound like it would work? It's an attractive idea to me!
Anyone know any Web sites on the topic that I can explore? thanks! =^..^=
|By Barrons (Barrons) on Sunday, September 19, 2004 - 08:39 pm: Edit|
Obviously LA prices are out of reach for both faculty and parents.. We are mostly thinking about NORMAL towns where 200-300K buys something nice. Now you might make more $$$ off the LA house but that's a LOT of cash to have handy.
|By Thedad (Thedad) on Monday, September 20, 2004 - 02:12 am: Edit|
Dstark, may I have the Powers That Be give me your e-mail address? This will get into a back-and-forth discussion, I think. Westwood is doable, though not with positive cash flow with minimal down payments. I even have specific buildings in mind.
The people who insist on better tenants--i.e., a fairly good hope of not getting units trashed--generally give a mild trade-off in rent to do it. Depending on the student and the unit, you can get $500-$800 per month per student. The recipe for disaster, imo, is when you cram six students into a three-bedroom apartment. Single-family residences are not doable near UCLA.
For homeowner's dues, figure $250-$350 per month...they shouldn't "eat you alive."
The people I know who have done this and have savvy accountants figure out that they come out well ahead of the game compared to just chucking rent money into student housing. The caveat is that you need to have some cash behind you to make it work...doing it with 5 percent down isn't going to pencil out too well.
As an alternative to Westwood, I'd think about a unit in West LA or Santa Monica or Palms near a bus line...many bus lines terminate at UCLA>
|By Dannysmom (Dannysmom) on Monday, September 20, 2004 - 02:22 am: Edit|
There is no doubt you can make money if you are looking for long=term gains. As thedad says, positive cash flow won't happen. I caution you, however, that students are not good renters. They will appear to be three and end up being six. Good luck proving it and suing for damages. I for one think there are easier ways to make money.
You ask if putting down more works. Well, if you don't have a better use for the cash and believe in real estate as a long-term investment it does. Maintainance is not the killer. The issue is that everything combined in a good CA market will leave you in a cash negative position. This is fine for those who want to own real estate long-term and have the resources to finance it. It is not a maximization of real estate investment. You best possible investment in real estate ha little to do with your child's college town and everything to do with the fastest appreciating real estate markets. But this investment can't be beat if you are looking for a nice place for your kid to live.
|By Nel (Nel) on Monday, September 20, 2004 - 06:16 am: Edit|
Another question popped into my head after reading more input...
Do College Rental landlords 'stop by' once a month or so to check on the scenario, ensure no 'extra' people live there, that electrical is not overloaded, etc?
Do you have the tenants (kids) sign and initial a pre-rental agreement about certain 'restrictions'? I take pre-rental photos of each room in my current rental home in my home-town area, and do a walk thru with the new tenant, & do it again when they exit. Been doing it for 21 years with no tenant problems at all. ('course, none where 18 or 19 either, LOL!)
For a college rental type house in mid-Ohio, would the $300-400 per month per kid, be fair, or is that $500-800 more likely?
Did/would anyone consult with neighbors prior to tenant selection; ie: somewhat let them know you'd like them to meet the kids/tenants b4 you sign with a tenant? Somewhat to make the neighbors feel involved & consulted?
Just seeking more info... the small, quiet community where the college is, has maybe 8 side streets near it, and the area is very calm, serene & nice; I do see college kids in some homes on side streets, and the little village is very accomodating & nice to the college kids. Thanks for all the suggestions!
|By Dstark (Dstark) on Monday, September 20, 2004 - 10:36 am: Edit|
Thedad, I put my e-mail address in my profile temporarily.
|By Mom60 (Mom60) on Monday, September 20, 2004 - 04:35 pm: Edit|
I work part-time for a property management company that on occasion rents to students. We require a parent to co-sign on the application.
I have known several people who have done this. All were in various college towns where students live off campus after the first year. One went with a rental agency so her D would not have to be the landlord. This is a added cost but takes most of the work out of it. You could call up a few of these agencies in the area you are looking at and see what rents go for.
Also others have bought houses and then had there kids round up roommates. This sometimes puts your kid in the spot of being the responsdible housemate. Or I know of one family that knew their son would be hard on a place and just figured that at the end of 4 years the place would require some major work.
Also while figuring your cost you need to take into account that the house might not be rented in summer. You also will likely turnover your tenants year to year thus requiring maintenance on a more regular basis. For example painting, carpeting and cleaning to ready it to rent again.
|By Dstark (Dstark) on Monday, September 20, 2004 - 09:56 pm: Edit|
Mom60, you are in Santa Barbara, right?
Buying at today's prices and renting out properties...does that work in Santa Barbara?
What do 1 bedroom and 2 bedrooms rent for there?
The condos do look nice down there. I would have second thoughts renting to students.
|By Thedad (Thedad) on Monday, September 20, 2004 - 10:22 pm: Edit|
Dstark, got it, thanks. It may be tomorrow or Wednesday before I get to an extensive outgoing e-mail run. Juggling, juggling, juggling.
I'll try to remember to give you a "Ping!" on my next pass so you can forward any UCLA-specific questions, etc.
|By Mom60 (Mom60) on Tuesday, September 21, 2004 - 11:15 am: Edit|
DStark- at todays prices it would not pay to buy something and rent it out. Prices have continued to skyrocket but rents have stayed about the same. Prices of homes and condos here are very dependent upon what elementary school district you buy in. The cheapest condo for sale right now is in the high 4's and is actually a converted apartment building. To get something nice you would have to spend 600,000 I would think. The condo that I know of is renting for 1500 for a 2 br 1 bath without a garage. And it is not something that most of us would live in.
A basic 1960's track house is now above 800,000. And most need work.
The areas I know of where people have done college rentals are SLO and Davis. I think SLO might be getting to expensive as well. Though I think it is hard to find housing there so that probably helps.
|By Wlrsqtr (Wlrsqtr) on Tuesday, September 21, 2004 - 12:48 pm: Edit|
Several of Ds friends (college sophmore guys) are looking at purchasing (together) a condo near a state U about 1/2 hour from us. They plan to rent it out during school year and live in it (instead of home) summer - they all go to different schools. They have done some math and think they can break even $10,000 per kid required for downpayment. Kind of interesting and it is all their initiative. Getting the $10k is the challenge.
|By Dstark (Dstark) on Tuesday, September 21, 2004 - 01:43 pm: Edit|
Mom60, I just spent a couple of days looking at Berkeley real estate.
Similar stories to yours.
Doesn't make sense to buy and rent at today's prices.
Almost everything is going for over the asking price.
Prices of everything keep going up, rents are trending lower.
Inventory for sale is very low. In Berkeley, there is going to be 1,000 more units available for rent in the next year. I don't see how rents are going to go up with that supply.
Wlrsqtr, I like that initiative.
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