Investor · Southlake, TX · Member since 2009 · 950 posts · 338 votes
Am I crazy for considering a rental property for my daughter going away to college next year? She has to stay on campus the first year, so I think that will give me time to learn the area. She would pay market rent, and we rent out the other bedrooms. What are some of the things I should watch out for? I'm assuming college students only lease for the school year, so I will probably have vacany in the summer.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
16y
Hi, I'm in a college town. Several infact. Most colleges will require out of town kids to stay in a dorm where they can become acustom to college life in a safe environment, sometimes two years. If you have an adut family kind of thing you can get them out, but that's probably not a good idea. Parents buy properties all the time, espcially when there are two kids a couple years apart. Buy the house, other kids pay rent and live with the owner. After they are done, sell the property and make a few bucks! Maybe more, but it's better than throwing rents away.....sometimes, LOL. Good Luck, Bill
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
16y
Hi, I'm in a college town. Several infact. Most colleges will require out of town kids to stay in a dorm where they can become acustom to college life in a safe environment, sometimes two years. If you have an adut family kind of thing you can get them out, but that's probably not a good idea. Parents buy properties all the time, espcially when there are two kids a couple years apart. Buy the house, other kids pay rent and live with the owner. After they are done, sell the property and make a few bucks! Maybe more, but it's better than throwing rents away.....sometimes, LOL. Good Luck, Bill
Financial Advisor · Tampa Area, FL · Member since 2008 · 956 posts · 214 votes
16y
i believe that most lenders won't count the rent as income if it is paid by immediate family (though it wouldn't qualify anyway unless its been on your tax returns for 2 years by most standards anyway).
also, you are assuming incorrectly for probable vacancies. many states now require students to take atleast 1 summer session and many students will stay in the area regardless as they may have jobs or other obligations. when i lived in the dorms when i was in college, i used to hate it when the dorms would close for periods of time (ie between fall and spring term). such a hassle!
you would be far better off trying to get your daughters friends in the house as opposed to strangers. around the universities here, the student housing (non-dorm) have private bathrooms for each room so sharing a bathroom with strangers may be a tough sell
I live across the street from such a house for like 3 years now.
It can be okay and quiet or like the middle year here,,,VERY noisy with goings and comings all times of the entire night.
If somebody wasnt roaring up on a motor cylce the boyfriends were going and coming all times of the nite.
I am not sure what kind of zoning is 'required' for running a college hotel,,,but would think here, R-3 multiple family,,because it sure is multiple by quite a ways.
They have the street parked solid full of cars all night long but most are gone by 7 to 8 AM.
Dont forget IF considering this,,,IF you have a real bitchy neighbor,,they WILL be calling every time a Mc Donalds wrapper hits there lawn,,or a brown bottle!!
I am more tolerate of them than most. Only real problem was when they lit fireworks last 4th of July and had the street pretty well ablaze in them,,,and my porch floor mysteriously now sports burn holes in it now,,when it didnt in June. I didnt even ask them how that might have happened,,just hope they are more careful in the future. JUST missed a cardboard box that would have burned pretty fast.
So in conclusion,,if doing this make GOOD neighborhood friends and help them out,,,scoop and mow for them if elderly.!
Investor · Southlake, TX · Member since 2009 · 950 posts · 338 votes
16y
Interesting!
There is a requirement to stay on campus the first year. This would give me time to learn the area. I would also assume my daughter would know the tenants. Good point about the bathrooms. The dorms for the freshmen are all community baths. This will be a culture shock for her, LOL!
My first thought is that they would not be profitable, or breakeven propositions. Is it necessary to be within walking distance in order to be attractive to students?
Real Estate Investor · Bloomington, IN · Member since 2008 · 119 posts · 8 votes
16y
I have a college rental. I would like more, but "buy rights" are tough to come by and rare on the MLS.
Buying right might not be so important for you because you'd be paying rent somewhere anyway. I do have it rented until August, 2011...the kids sign 9 months before they move in which is nice. Proximity to campus makes a difference, I'm told.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
16y
SO, ya think ya know your kids? LOL
I financed a house to a guy that did this. He made friends with the neighbors when we looked at the house...phone numbers, the whole bit! He got a lease with another student (his daughter's roommate) that was good.
JD, my sister and brother-in-law lives in a very nice area, and he has the same problem, and he's the admistrator at the university! LOL
Real Estate Investor · Cincinnati, OH · Member since 2008 · 172 posts · 37 votes
16y
Tod,
I can give you some firsthand insight since I am a college student and I also own rental property.
When I first came to Cincinnati 3 years ago, I was thinking about buying a property somewhere really close to campus. However, I found that since demand is high near the campus, prices are much higher, leaving you a very thin cashflow (if any that is). You would really need to find a needle in a haystack to find a good deal on buying properties close to the college. The good deals I've seen near the college are usually lender-owned and in need of a rehab. You need to add value to the home yourself. Rarely will you find a good deal on campus housing from a regular Joe. In addition, most moms/dads who brought a rental property for their kid usually do not keep the property in the best of conditions.
I decided to rent near campus, and buy investment properties in nearby towns, which turned out to be much more profitable than buying properties near campus. Also, I find that parents who brought a house for their sons/daughter 4 or 5 years ago and need to sell it now because their son/daughter is graduating, are finding a hard time selling for what they brought it for.
Being next door to the college doesnt play here. The college is on outskirts of town where NO houses are within walking distance unless you are dormed on campus. Our small town may be different than larger towns and cities. The whole town is within 3-4 miles of school AND every kid has there OWN car these days,,at least out here in the wild west they do. So kids dont mind buzzing those few miles to class every day,,,the harder part is finding parking when they get there.
Across the street may be a bit different because they 'look' to be all nursing college students. First the owners daughter was ruling the roost and things were VERY quiet,,,when the sun went down you didnt even see a light in a window.
now the son has taken the reins and its party time all day and nite. (last year,,,but quiet this year,,go figure).
It seems by looking at where license plates tell me they are from,,,about 40-50 miles south of here.
Must be a different class of girls this year cause no boyfriends going to and fro this year!!
I agree,,,SOME kids take the first year at college to party and really enjoy life in excess.
Here I dont think you are required to be on campus housed first year!!
Real Estate Investor · Bergen County, NJ · Member since 2008 · 390 posts · 72 votes
16y
Every college and college town is going to be different. I haven't heard of colleges making students live on-campus for two years, but I have heard of colleges, mine included running out of space and needing hotels to accomodate students...
You can start getting familiar with the college now, check the admission rates, student size, what students are renting etc..
Rutgers is my school, and we always signed 1 year leases June-June and rents basically go for about 400-500 per person depending on the quality of housing.
I personally wouldn't buy in a college town if I had it set that I was going to sell in 4-5 years because what if the market is still sagging and it is not profitable to sell? If you are OK with holding longer then I say try to find something - if you can find something.
Vacancies in the Rutgers area are also very low because demand is high. My landlord while I was in college hadn't had a vacancy for over 10 years and other I have talked to said the same..
I think what you can gather from all the posts is every college town is going to work differently, you need to figure out how your specific target area runs.
Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
16y
heck ya i would buy!! at my college 2 or 3 years ago, living on campus was 3 or 4 grand a semester, and they had a mandatory meal plan for on campus students...basically around 15 grand a year was thrown away on crappy food that we hated eating (but did cuz we had to pay for it) and rent on a crappy dorm..that is how i bought my first house...it was cheaper to pay a mortgage and cook rice flavored with BBQ sauce!! even if it's not the best deal you ever make, you will at least be paying towards equity on a home instead of deepening the pockets of a college..also, i went to a small private college outside of the city, where you could buy a cheap house a mile away...larger universities will be a tougher purchase..depends on where your daughter chooses to go...something else to think about for college rentals, however..i have had people want to rent my house but couldn't bc their government aid only applied to on campus housing..not sure if this is everywhere or certain grants or what..just something to be aware of that everybody won't be able to live off campus
Flipper/Rehabber · cincinnati, OH · Member since 2009 · 211 posts · 59 votes
16y
I sell a lot of college rentals in Cincinnati..the students sign 12 month leases here..I just listed a 5 br I just rehabbed for 82K..will gross 2K..I have lots of parents interested as they can make a few bucks while their kids are away and the rentals are in high demand. I dove into this university area b/c freshman class was largest ever last year..it is important to determine the demand for the particular univerity you are considering. Good luck!
Real Estate Investor · Bergen County, NJ · Member since 2008 · 390 posts · 72 votes
16y
Originally posted by Tod Radford:
Thank you all for your words of wisdom.
I assume I would have a separate lease for each tenant, acknowledging that there are other tenants?
Our landlord made us sign one lease with all our names on it, and he wanted once check from us. This way he wasn't chasing around 8 kids and getting 8 different checks for one property.
Just make sure you clearly explain and that it's in the contract that just because one person doesn't pay doesn't mean you send in $400 less dollars that month and that one person gets a late fee.. it's all or nothing and eviction...
I'd try to find some current landlords in the area and take them out to lunch.