Accountant · MN · Member since 2008 · 142 posts · 25 votes
I was just curious if poeple usually rent out the entire house or if they rent on a room by room basis? Especially in college areas, I think it would be easier to rent single rooms that way at least part of your mortgage is taken care of while you find more renters.
Also, do people usually plan there rental property prucahses around the school year, IE purchase a property before school starts when the students are still looking for houseing or do you just buy when you find the right deal even if it is the middle of a semester.
I am planning on buying a rental near a University campus, and have not found something that works yet and am not sure If I should wait until the next semester comes around.
Real Estate Investor · London · Member since 2008 · 3k+ posts · 74 votes
19y
Phil,
Renting rooms with common facilities is closer to running a hotel. If you really want to rent to students then rent the whole place to a group and make sure you get the right things in order (cosigners are the parents, etc).
If you want to rent individual rooms I suggest you look for a building that is split up into studios so that you are not dealing with people sharing bathrooms, etc. Just my opinion.
Do check the local regulations to make sure that you are complying with the rules and regulations for the area. There are special rules when you rent individual rooms vs. a house. At least in some communities there are special permits required and other habitability requirements.
Real Estate Agent · Minneapolis, MN · Member since 2008 · 193 posts · 7 votes
19y
Phil-
I do agree with REI. It is much easier to simply rent to a group of students that know each other. Even then, the cities are starting to crack down on the total number of non-related persons that can occupy a property. In Minneapolis for example, in properties that are zoned R2B, only 5 unrelated persons can occupy each dwelling unit.
I rarely see rooms for rent anymore (boarding houses). In fact, most cities are not renewing those types of licenses when they expire or the building changes hands.
I would buy after the tenants are in place for a couple months. If you bought right at the beginning of the school year, I would be concerned about the quality or longevity of the tenants/students. Remember that with students there is a high probability that you will turn your entire building over each year. Most of my properties have multi-year tenants in them, as a comparison.
Lastly, keep in mind that around colleges & universities, property is often sold at a premium price and then it may be in substandard condition. I guess it is the old "location, location, location" principle!
I see you are in Minneapolis. If you want to talk at more length, shoot me a PM and we can grab coffee.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
19y
In the town where I looked for student housing, most places were rented like John describes. Only a few exceptions. There were a number of large houses that had been broken up into multiple units, each with a kitchen and bath. In some cases there were doors that could be locked or a wall that could be added or removed. That allowed it to be rented as either a 5BR or a 2BR plus a 3BR (for example.)
Do check zoning. Some properties I looked at were only zoned for two unrelated people, and yet were being rented for more. The planning guy said they did get calls about that, and did followup.
The key rental periods were in March and then a lesser period in early August. Leases ran from May 15 to May 15, August 15 to May 15, or May 15 to August 15. If you buy some other time of year, you would want to have tenants already in place.
At least in this town, student housing didn't really command a premium price. But, there were some rough units.
Just plan on the tenants turning over each year. And either a vacancy for two months or discounted rent. I always run the numbers assuming some nominal vacancy rate plus only 10 months a year of rent. That way a tenant for the summer's a bonus instead of a vacancy being a killer.