Thoughts on buying a condo/apartment for student rental?

Question

My objective is cashflow. Can I FHA into this? I understand there is HOA fees.

Is there successful beginner real estate investors, who have done this?

Tiffany Hulsey · Answer

Good afternoon.

Just a little extra to think about. Because Nashville is trying to push back on the STR market, some local HOAs are adding limits to their bylaws to prevent STR of the property. For example, my personal HOA allows only one year rental or more, making a semester based model impossible. That is only one example of the "rental industry" restrictions to be wary of, at least in Nashville.

Good luck to you and keep us updated on what you learn in this process.

Jennifer Donley · Answer

@Joshua Rowland, I agree with the rest regarding strictly the numbers.

But I stay away from condos for 1 simple reason - I don't have full control over how my property is run and maintained.  Some HOAs are awesome and well managed.  Others are not.  And just because one is run well now doesn't mean it will be forever.

Andrew Syrios · Answer

As you noted, the HOA fees are the biggest problem. If they are reasonable and the property still cash flows, then I would consider condos. (We own a few condos for example.) But overall, I would prefer houses, duplexes and properties like that.

Luka Milicevic · Answer

@Joshua Rowland

Read the HOA bylaws front to back.

Some HOAs have serious restrictions on renting and what that might look like. Maybe you need to live in it for a certain period of time before converting to rental. Maybe they don't allow it at all.

If it's a non professional HOA and managed by the residents then they are going to give you hell. People get on a power trip.

Larger communities and apartments are typically managed by professional companies and things are more black/white AKA the rules are the rules.

Bud Gaffney · Answer

@Joshua Rowland Go for it!

Kuriakos Mellos · Answer

@Joshua Rowland hello! (I love Nashville by the way).  Agree with Tim above, it comes down to numbers - something to think about, especially with how covid is still affecting lives (and universitites) - what is the local college's plan come back to in person learning looking like?  Student housing can be a VERY expensive for students to cover - especially if on campus. Providing a nice and more private setting for students is appealing.  HOA's are a little bit of a pain BUT there are perks: water is covered, lawn maintenance is usually covered and you can count on putting the majority of your CapEx 'funds' at 0 because HOA's cover those kind of items.   If you can get a decent mortgage and then be able to come back and charge a higher rent for students - it could be a win - but check your numbers first.

Tim Herman · Answer

@Joshua Rowland what do the numbers tell you, will it cash flow. You need to use a property analyzer. Some in the files section and Bp has calculators, in the tools section, I believe you can use up to  5 times for free. Does the Hoa even allow rentals, What are the reserves for the capex items. What items does the hoa cover. How old is the complex,etc.

Thoughts on buying a condo/apartment for student rental?

Most Popular Reply