How to Analyze a Student Housing Investment

12 Replies

I am looking for some analysis of my first deal. Thank you!!!!

2 structure property. Student housing.
9 total rooms.
Rooms 600 a month each. 5,400 a month.
Taxes 12,000
Insurance 2.400
Turn key condition. I'm a contractor, I inspected.
290k.
And owner financed for 2 years at 8% until I can re-finance. 100k down payment. ill do management myself for now. 1 mile from my home. Thoughts?

Is that insurance (12k) and taxes (2400) monthly or annually?

12,000 a year for taxes
2,400 a year for insurance

Owner paid heat and electric & snow plow
@ 6000 a year.

Originally posted by @Christian Lincoln :

12,000 a year for taxes
2,400 a year for insurance

Owner paid heat and electric & snow plow
@ 6000 a year.
Bill Gulley
Darren Sager Shaun Reilly
@brandon turner

Are you saying you would be paying heat and electric for all of both buildings or that means just paying to have lights outside and common areas and just heating some common areas?

If you are just paying heat $6K doesn't seem like enough just for that for just the coldest stretch of winter.  Also if you are paying all the electric for 9 college students I'd think that has to be at least pushing like half that total.  Snow removal is obviously a wild card, you could have very little cost or if you get a decent storm every week you can end up spending more than that total just on that as well.

Anybody? I'll pay a seasoned investor for 1/2 hour phone call on this.

@Christian Lincoln  - the one thing I didn't take into account would be after the refinance, when you could drop your payment from 8% to probably 6%  (but there is no way to know what rates will be then.) That could be $250 extra in income. 

Thoughts? 

I don't know what @Christian Lincoln  thinks, but I just watched your video and thought it was not only very nice of you to do, but very informative as well! Thanks for showing how to use that calculator. :)

Brandon, You are my new analysis HERO. Just seeing this now. so awesome!!!!

@Brandon Turner , thanks for taking the time to display the calculator. Important benefit of becoming Pro once I am analyzing potential properties.

So this seems to be a go. How it's shaking out, different from @Brandon Turner 's video and my newly acquired numbers.

The difference between lowering the rent a bit and having the students (or tenants) pay the utility bill will be huge. And that's because i'm in the NorthEast. $$$$ oil/gas and electric highest in country.

The difference between the number of bedroom and adding one more is huge. Once you hit all your overhead and mortgage, that next room is basically all profit.

Ask the owner to hold the note if you have some credit issues. Pays off. I will re-fi in a year. So that 8% will hopefully be a 5% and the numbers get better.

Property has septic and wells, so no water bills. Trash only 400 a year. And I overestimated for electric but that's fine.

The lawyer has been very helpful in sorting out the kinks both with town and with eccentric owner, who was insisting a friend of friend stay in one of structures past the time the students return. 3 months after the closing.

Does it stay rented over the summer months?  That could make a big difference.

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