Would you buy it?? College Rental

3 Replies

I'm from a small town in TN with an active college in the town. We live in Louisiana and have started investing (SF rentals) here but cash flow is tight. It’s a seller’s market where we are. We’ve gained Some great appreciation through the BRRRR strategy! We’re now looking for some good cash flow. I think we’ve found it. Wondering what your thoughts are. Duplex with Unit A renting for $650 3/2 and is currently rented Long term by a gov agency. Unit 2 rents for $900 and is rented through Aug 2018 by college students. Rents well per property Mgmt company. Walking distance to school. Property is listed for $110k. If we can get it for $100k and put $5k into renovating 2 bathrooms, total monthly costs would be $1100 for everything. Including saving for maintenance and Cap Ex. This leaves $$450 in CF. I think this looks great. But the thing is that if we ever wanted to sell down the road- to 1031 or something- it would be tough to sell. Even though cash flow is great- appreciation is bad and things take a year or longer to sell. What are your thoughts? TIA!!

What gov agency rents a duplex, I'd def want to see the lease on that.... But it doesn't sound worth it if you already think it'll be a tough sell long term. I'd make lowball offer that you'd be comfortable holding long term, accepted great, if not who cares on to the next one.

@Matt K. with all the hurricanes we have down here it's not uncommon for FEMA to rent out property for workers to stay at. I know a few people who have had 3-5 year tenants that way.

I know you said you are from there but have you done a market analysis to back up your assumptions on the future of the market?  What is the enrollment doing at the school and local economy?Also What is the age of the home? What kind of area is it in? There are areas close to both SLU and LSU that I wouldn't invest in even though it's walking distance. And it sounds like the govt agency is getting below market rent that you could raise after lease is up. How long is their lease?