Starting in a college town!

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Hey everyone this is my first time on the forums! I am wanting to start investing in my college town of Murray, KY. Any advice on how to invest in rentals in a college town? Thank you!!

@Evan Jackson

-Find out what college rentals rent for in your area. They can usually rent for more than a typical rental. For example, maybe you can get $1000 for a 4 bedroom as a regular rental. However, maybe you can get $400 per bedroom as a student rental.

-Some landlords rent by the room. I prefer to to have one lease that everyone is on.

-The more bedrooms and bathrooms in a house, the better. If you are getting $X per bedroom, a four bedroom is better than a three.

-Find out the local college rental cycle, i.e., sign leases in May for a Aug-July lease. It can vary from area to area.

-Buy close to the school, as well as other amenities such as bars, stores, and other places college kids want to hang out.

-Check the zoning laws regarding number of unrelated people allowed to live together.

I haven’t done any in a College town personally. But rent by room is deemed pretty standard around FSU in Tallahassee as an example

At FSU they’re between $700-1,200 a room

Be prepared for damages, especially if its near bars and such

They’re usually 1 year leases

Close to all the things the students want to do like Brett G. said

@Evan Jackson My sister has properties in a two University town and often gets older students looking to be away from the campus scene. Her rentals are not near the campus. She finds that her students typically only will sign leases from August-May 31 and then she has a 2 month vacancy. Or they vacate and just abandon the security deposit and don’t pay the last two months leaving her short one months rent.

She typically doesn’t have much damage with these off campus rentals because her tenants aren’t out partying at the bars so much but losing the security deposit to one of the last two months rent sucks.

So be careful and be sure to check that your tenants are still there at the end of the year because if they turn off the power and vacate the property you can end up with mold in the building and in the fridge and squatters/vandalism, etc.

We own a property with an ADU in a college town in Washington State. My parents also own 2 rentals in this same area. Some thoughts on college rentals from our experience and of some of our neighbors.

1. Rent by the room typically can bring you more rent depending on the bedroom/bathroom count. Depending on your property, you may be able to convert a finished attic space or basement to a bedroom. Please consult local building codes. 
2. A great way to avoid vacancy is to have current tenants find the tenants for the following year. 
3. Sign a year long lease so that you don’t have several months of vacancy during the summer break. 
4. Make sure if you allow subletting during the summer that you have a clause in the lease you have the right to screen the new tenant on the sub-lease. 
5. Repair costs have been higher with a college rental than with a long term tenant with our rentals. We have had great long term tenants that have often fixed their own shower clogs, leaky toilets, etc. We receive many more repair calls for college rentals so be prepared to fix more yourself or have to pay a handyman.

Hopefully some of this info helps. Feel free to reach out directly if you would like further info. 

@Evan Jackson

Two of my properties are in a college town. I treat them just like any of my other properties with just keeping in mind that students usually sign leases in the summer time or early spring so if your tenants lease is up in let’s say February you might have a longer vacancy period. It also depends on the size of the college town. Is it a small college in the middle of nowhere where you’re tenant market is really only college students? Or is the population large enough, other types of industries etc where a non student might lease your property? The two properties I currently own in college towns are being leased at the moment by professionals…not college students.

@Evan Jackson I don't have a ton of experience in this area, but I will say I have heard an iron clad noise complaint section in your lease is a good idea. I've even heard things like, if the police are called its an additional say 50$ or 100$ (your choice) on your monthly payment. It helps to retain your other tenants and keep the neighbors happy. I'm not sure what the laws are in KY but it's something to keep in the back of your mind.

I haven't done it myself but I know that in some college towns there is opportunity for extra income from things like parking.  My wife went to school at Florida and on gameday it is very common for landlords to let cars park in the yard for $20-50 each depending on proximity to the stadium.  Folks with a big yard are making an extra $500-1000 per weekend when there is a home game.  Of course the wear and tear on the yard is a consideration...

My very first rental property was a house in a college town. I bought a four bedroom house that was less than a five minute walk from campus, had a small convenience store, and a bar right around the corner. I stayed in one room, and rented the other three bedrooms out to friends. It more than paid for itself, and when I sold it after four years, the appreciation gave me enough money to buy a single family house for myself, and a duplex which I flipped. 

Rent it by the room. Find out how many unrelated occupants you are able to have in one property as per the city code. If you're able to have 5 and the house has 4 bedrooms, build another room or divide up a large room. Each person should get there own lease. Don't allow couples, children or dogs. Go read my essay on the SCARLETT Method.

@Evan Jackson

Awesome idea! I did it and it’s the best decision I’ve made. One word of advice that I was given, was to find newly weds to rent to, and second, put a washer and dryer on the property. Putting appliances in the unit is very attractive to college students who don’t have any.