College town. Lots of deals. Where to start? Who to start with?

Question

Hello BPU!

I live in a college town in Ohio. There are apt buildings popping up left and right for sale. I feel like Owning student rental in this town is a win win no matter what the property is/looks like/ condition. You’ll make your money back and more. What’s the best way to shoot these deals out to possible partners? I feel like I’m sitting on a lot of opportunities with out the proper way to connect. Would love some help/ suggestions. Thanks for the help in advance!

Will Gaston · Answer

@Blake Jennings My experience in student rentals tells me that the best way to find value in a college town is likely mispriced rentals. There are lots of these in my market. Landlords that would rather rent to quiet grad students and/or young families than to 18-22 year olds.

In 2019 I bought 4 units that were leased for $3750 and doubled the rent to $7500 by renting them to undergrads after the leases expired. I did absolutely nothing to the property.

You need to bring value to a potential partner and understanding and identifying under market rents could got a long way into doing so.

This thread also may be helpful: Nearing 1,000 College Students: Here's What I've Learned

Cameron Tope · Answer

Hey Blake,

We own some student rentals in Athens, OH which sounds like a similar student housing situation that you're describing.

I would reach out to some local investors and see if they're in buying mode. If they are, ask them what they look for in a deal then you can begin analyzing properties.

Then workout a finders fee or a piece of the equity in the deal.

Best of luck!

Dave Poeppelmeier · Answer

Hi Blake, my question is why are these popping up left and right? Student Housing has been in HUGE demand by investors here in Toledo. Being in Student Housing myself, I find more students are looking for houses instead of apts and dorms due to Covid right now. See what their occupancy is (which you would do anyway) and if the building is only half full, there's your answer. I would also know the general financial health of the College/University you're investing around. If it's small and it's not guaranteed to get through this Covid slump then I would take pause and assess if you could rent these apartments to non-students. But if all of the numbers work and the building is pretty much full, go for it.

Blake Jennings · Answer

Hey Daniel, From what I've gathered being a life long college town resident, most landlords around here will rent for all 12 months/per bedroom (students may move out for the summer but are still required to pay) . and require a 1 month deposit from each occupant. All the signs in the yards and windows and on all the property management web sites are all advertisements for the following year and are typically up mid way through fall semester. It's pretty crazy driving around in the fall of 2020 and seeing "for rent 22-23 school year". That being said, with this process in place and the extremely high demand for these houses/ apartments your turnover is completely built into you rent structure.This year was very interesting! I work for the university in my home town. We did a 10 week fall semester and we are now in week 5 of a 16 week spring semester. This school year the University let sophomores live off campus vs the years before were 1st &2nd year students were required to live on campus. With the pandemic changing our lives daily and the sight of vaccines on the horizon, I'm very interested to see how that policy changes moving forward. When that decision was made last year, 100's (dare I say 1000's) of leases were picked up and signed over night. Last note here is There has been (from what I've witnessed and discussed with others) near zero drop in student rental occupancy, and this year is the largest incoming class in school history which is 5,000 +. Sorry for the novel! would love to hear more of your thoughts!

Daniel Petta · Answer

Hey Blake, I'm following as I'm interested in this market type as we emerge from this pandemic.  I think there will be good opportunity to find deals but I'd also ask existing investors how do they plan for occupancy costs with what I would expect to be higher turn over rates than traditional long term renters.  From what I've seen, turn over costs can be a full month's rent which can be tough on my models as an out of state passive investor.

College town. Lots of deals. Where to start? Who to start with?

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