I am a college student currently as well as a Real Estate Agent. As an agent, I help students (my friends and peers) find off campus housing. At my school, having an off campus house is extremely desirable. I have found an excellent potential rental property that I have shown to several groups of students, many of which who have said they would be willing to sign a lease immediately, as well as have their parents' cosign, should the property become available. The property in question is currently for sale at 149k, and is new construction. A mortgage payment for a house at this price would be around 500-600 plus real estate taxes and homeowner's insurance. In my rental market, a house of this size and location could be 1800/month. How would I go about doing this without having to shell out the first 20k for closing costs, down payment, and mortgage payments for the first 6 months until the tenants begin to make payments? Like I said, I have guaranteed tenants, I would only need possession of the property. What would be the best way to go about this with minimal out put?
First I have to say college students are notoriously fickle. They haven't signed the lease until it is signed and you have a deposit and this is not their season for signing leases but maybe you have a different situation in your area and you might be looking at a june lease up.
That being said if you give it a try you have to do the calculations on the house. What are the property taxes (not insignificant in NJ) and what would be your expenses? Do you have an income and would you be living there? You might get an owner occupied mortgage if you are living there. some of those will have a lower down payment. A bank is only going to count about 50% of the rental income towards you getting approved for the property. Does your income otherwise qualify you for the house? Do you have a family member that would front you cash or go into it with you. Or another partner? There are probably others that have a better handle on financing then I do.
PArtner up with an investor. Let them finance it and do the rehab. You bring them the properties and the students.
Try to rent to grad students. They're generally committed to a program for 2, 3 or 4 years.
You need to control the property, not necessarily ownership. You could present the owner (or listing agent if its listed) with your plan, collect a commission on the rental as well as possibly set up a management agreement for yourself to make some residual money of managing the property, which would also be great experience if you want to get into owning rentals.
Rentals with no money in your pocket generally are a disaster waiting to happen- if you have to evict the tenants, or if something needs repair you may be SOL
You could also try to get a master lease agreement or an option on the property (I am not familiar and have never executed either of those strategies but someone with more experience may be able to guide you on that front)
You could also find a partner who believes in your ability to run the deal as well as the deal itself to help you come up with the money and qualify for the debt.
Finally you could try to ask the owner to finance the purchase for you.
If you have no money in your pocket I would recommend you first make some money then try to buy properties, this is not going to be the last good deal in your area and over-leveraging yourself is a recipe for disaster. College rentals have high turnover (probably a new tenant every year) and high maintenance and repair costs, which makes them expensive to operate.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing