College student looking to invest in rental properties
Raleigh, NC · Member since 2020 · 2 posts · 0 votes
Hello all, my name is Zack Carson and I am a current chemical engineering student at NC State University.
My parents and I are looking to get into the market on rental properties in the Raleigh/Durham area.
I was hoping to start here to ask for any advice and make new connections as I start my journey!
My goal is to hopefully purchase a property and be renting it by the end of the year.
Thanks!
@Zach Carson (site is not tagging you for some reason???)
Hi and Welcome to BP!
It was about my junior year in college when I first got interested in real estate, so great timing!
A few thoughts:
1) Your first and best goal for right now is completing your degree. Yes, I know there are a few exceptional folks who quit college and made billions, but typically they were not real estate investors (REIs). More like Bill Gates/software geeks. People who invented new products. Real estate is more of a slow wealth building process. So if you start churning out recipes for new chemicals that will revolutionize the world, then sure, quit and do something else. Otherwise, be sure that whatever you do (real estate, etc) keep your focus on your degree.
2) Keep in mind that with C-19, demand for on campus, seated classes may be smaller than in year's past which means many people may stay home this semester and/or Zoom classes from Ma and Pa's basement. Be sure to diligently scout your market and find what vacancy rates are like for the upcoming year.
3) By that same token, now might be a time to get some DEALS! Find the Ma and Pa land lords who don't have a full house of student renters and see if they might lease option (L/O) their property to you. L/O is a great way to gain control of a property for only a little money down (the option fee). Then you can take 1-2 years to see if the demand comes back, and then you've got yourself a house with paying tenants/roommates already. With an L/O, you're not the owner, just a renter, but you find sub-tenants to lease from you and their payments cover your rent and helps you save up money to someday exercise your option and buy the property. Likewise, if you find it's a disaster and you can't rent it out to cover your payment to the Lessor/Seller, then all you lose is your option fee. It's kind of the best of both worlds in an uncertain times.
4) Be sure you know land lord / tenant laws. A lot of college students and parents aren't familiar with them, but you and your parents will be held accountable if you violate them. Most states have their LL/T statutes online. Find and study!
That's enough to think over for now. Exciting times for sure! I hope this helps.
Hey Zack,
Congratulations on starting your journey in real estate investing! My wife and I live in Portsmouth, Virginia (close to the border of NC). Add me and let's connect :).
Hi Zack,
House hacking as a college student with the help of your parents is a brilliant way to start your journey! I lived near Hillsborough Street for a few years as a kid. Great area. I still love that area, especially for investing. My parents live in Raleigh, so I'm down there all the time. I'd be happy to connect, and I'll be a resource to you in any way I can.
Hi Zack,
Congratulations on your early start! I am a little later to the game than college but ironically enough I studied ChemE in New York. I am also just getting ready to jump into the Raleigh investing market and would love to connect.
All the best,
Sean
Hi Zack
My name is Amir, and I in environmental engineering phd program at NC State. I have the same idea and join here to get some information.
Wish you luck
Hi Zack,
Echoing what @Chris Mills said. House hacking as a college student will be a fantastic thing to do, Find something close to school, even a walk from school to cut your cost so you can serve up more for reinvestment.
Best regards,
Alfred
Echoing the house hacking strategy. You can buy a multifamily or even just a SFH and rent out the bedrooms. I've had great success targeting those right out of college in the downtown area. Look at the garner/raleigh line too
@Zach Carson (site is not tagging you for some reason???)
Hi and Welcome to BP!
It was about my junior year in college when I first got interested in real estate, so great timing!
A few thoughts:
1) Your first and best goal for right now is completing your degree. Yes, I know there are a few exceptional folks who quit college and made billions, but typically they were not real estate investors (REIs). More like Bill Gates/software geeks. People who invented new products. Real estate is more of a slow wealth building process. So if you start churning out recipes for new chemicals that will revolutionize the world, then sure, quit and do something else. Otherwise, be sure that whatever you do (real estate, etc) keep your focus on your degree.
2) Keep in mind that with C-19, demand for on campus, seated classes may be smaller than in year's past which means many people may stay home this semester and/or Zoom classes from Ma and Pa's basement. Be sure to diligently scout your market and find what vacancy rates are like for the upcoming year.
3) By that same token, now might be a time to get some DEALS! Find the Ma and Pa land lords who don't have a full house of student renters and see if they might lease option (L/O) their property to you. L/O is a great way to gain control of a property for only a little money down (the option fee). Then you can take 1-2 years to see if the demand comes back, and then you've got yourself a house with paying tenants/roommates already. With an L/O, you're not the owner, just a renter, but you find sub-tenants to lease from you and their payments cover your rent and helps you save up money to someday exercise your option and buy the property. Likewise, if you find it's a disaster and you can't rent it out to cover your payment to the Lessor/Seller, then all you lose is your option fee. It's kind of the best of both worlds in an uncertain times.
4) Be sure you know land lord / tenant laws. A lot of college students and parents aren't familiar with them, but you and your parents will be held accountable if you violate them. Most states have their LL/T statutes online. Find and study!
That's enough to think over for now. Exciting times for sure! I hope this helps.
@Erik W. Thank you Eric, that was some great food for thought! I will definitely keep researching and looking for what is best for me. Thanks again!
NCSU students should really look at house hacking the 4/4 apartments on Avent Ferry Rd and the surrounding area.
They usually make good rental properties, but investors are limited on how they can invest there. The properties are in a condo complex that is over 50% occupied by investors, so you can not get a conforming loan on an investment property. But you can for an owner occupied. And take advantage of cheaper rates and low down payment.
So as long as you are willing to have 3 roommates, or loose cash for the first year, these can be great. Just move every year to take advantage of the occupancy rules and you can graduate with several of them. You'll be one of the few investors able to leverage those properties to their fullest.
A couple Cons are that they wont appreciate as much as a duplex/SFH that owns the land. You end up screening far more tenants because college kids move a lot. They also trash the place sometimes. Work with someone to get a good capex estimate for them (150-200). If you are more active you can make more with short term rentals. The institutional investers only want 1 year leases, but there will be students who need one semester and only wont 6 months, and will pay a premium for the flexibility.
These are fairly low risk / low reward properties mainly bought by cash flow investors for 5% CoC, but without using much leverage.