College town live in landlord market

17 Replies

I am looking to purchase my first house, and will be renting out the extra rooms. Is there anyone that has owned and rented college homes to students, that could pass along some advice for this market? Or perhaps any homeowner that has lived with tenants in general.

How did you find renters willing to live with their landlord?

How did you determine your radius within the city, that college students were willing to rent in? (the farther away from campus you get the lower the home prices are)

How did you choose the college town that was best for you (excluding those who bought the house for their kids while they were attending school)

@Carson Sweezy  I'll take a stab at your questions and maybe @Lucas Hall  will chime in since he was a live in landlord.

1. Students are price sensitive and want fast free Wi-Fi. Post that you offer those features on Craigslist and you should have plenty of applicants.

2. Regarding the radius, I would say focus on the transit nodes and bike lanes.  All things are NOT equal in real estate, so thinking within radius framework is not applicable. Think mesh (nodes and connections) not area.

3. How do you choose the college town? I suggest looking in areas w where you have some type of unfair advantage. Play off your personal strengths. That's the Art of War and it works for real estate investors too.

Best to you Carson!

Hi @Carson Sweezy,

I was a live-in landlord or many years prior to getting married. However, all those tenants were just out of college, and trying to start their career. 

Your profile says you're from Centreville, VA. Are you trying to market to GMU students? That's where I went to school. When I went there, the furthest students would live was Fairlakes, if they were attending the main campus. Others lived in the city of Fairfax, and northern Burke, and even Oakton. I did know a few students who lived in Centreville and Manassas, but they hated the commute, and moved-out as soon as they could. They only liked it because it was cheap housing. Most students wanted to be within 3-5 miles from school, and no more than 10-15 minutes.

If you want to command a high rent, get as close to campus as you possibly can, and make sure there is enough parking for all the tenants. 

@Al Williamson  

Al, thanks for your great advice. I had only been thinking in terms of proximity, love the suggestion of looking near transportation routes, or hot spots. 

I'm glad you mentioned using my personal strengths. I am an avid foodie that loves to cook, I am considering offering a meal plan option, adding an extra $100/month to rent for 5 home cooked meals a week. Lots of colleges have poor food choices, and the kids just don't want to cook so they go out a lot. Plus, I would be practicing all of my cooking skills on them and getting paid.

@Lucas Hall  

Lucas, I am from Centreville, but am looking to move away. The D.C. real estate market is too inflated for what I am willing to purchase. 

If you don't mind me asking, where were you a live-in landlord? Was it Fairfax? I am considering a state capitol such as Raleigh, Richmond, or Columbia, which all have colleges, and young people. The thought is if I cant find a college kid willing to rent, I would at least have enough demand for a recent graduate. Is this similar to what you decided on?

@Carson Sweezy

I had a group house on Capitol Hill where I lived with my tenants. There was lots of demand for that area.  

I like renting out group houses because I can get a higher rent.  For example, a 6 bedroom row house on the Hill will get $5,000 a month, if I rent to a group because they look at it as $1000 per person.  However, if I try to market it towards family, it would be too expensive. 

I always buy property based on location then square footage. The closer you are to the things that matter (transportation, shops, food), the better off you will be.

Hey Carson,

If you plan to rent to college students, then the closer to campus the better. Walking distance is best if that is possible.  

If I were you I would consider buying a multifamily house or a duplex, triplex, or quadplex. Living in the same house as college students will probably require a lot of patience and flexibility.  There will probably always be tension surrounding the shared elements of the house such as bathroom, kitchen, and common room, and most issues will involve cleanliness and noise.  Are you prepared to deal with a sink full of dirty dishes on a daily basis, or your tenants having friends over late into the night?  

If you are set on buying a house - then you may want to consider buying one that has a walk-in bathroom for the master bedroom (if this will be the room you would be living in).  I would also consider doing a little remodeling to really soundproof your room so that you can get a good night's sleep even with a party in the house.  

As the landlord, I have lived in the same house as my tenants before.  It is a more delicate living arrangement because you are essentially a roommate and a landlord at the same time.  If you think you can manage this, then go for it. 

As for location, buy in a good neighborhood close to a good school.  Can't go wrong with those two criteria.  

Jay

@Lucas Hall  

I'm sure you had no problem filling that house! Renting to groups so they can split rent are my thoughts exactly, I'm glad to see that it worked for you. Were your tenants friends of yours, or were they separate groups? What was the biggest issue with living with your tenants if any?

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@Jay Shapiro  

Thanks for the advice Jay. I am 22 and stay up pretty late myself, so the late night shouldn't bother me too much. The cleanliness would bother me. Have you ever tried a trial period to test out tenants? Otherwise, how did you screen them to figure out if you could stand living with them?

How did you collect rent each month? Did they hand you the check?

As far as collecting rent, I don't like the idea of a casual hand me a check.  That's just me.  I like the electronic payment.   The kids are already attached to phone, ipad, laptop.  They can make the payment from anywhere. No need for a face to face in a busy student's schedule.  Also a clear and visible trail of payment time and amount. No "I left the check on the table for you.  Didn't you see it. Oh, the dog must have ate it."

BTW, for $100 / month I'll stop by for a home cooked meal 5 days a week.  (wink) What a bargain!

Best wishes! Please let us know how it goes.

@Carson Sweezy  

I want to chime in here. I think that being a live-in landlord with college students is a bad idea. Some people already mentioned that you will have to deal with college student antics, and I think you need to give that some serious thought. I also think there is a certain level of "creepiness" if you have graduated but you are marketing your extra rooms specifically to college students. At least all of my guy and girl friends, including myself, would have thought that to be very weird, though I'm sure it is different everywhere.

That being said I think you can get around the creepiness factor if you really want to. Place your property into an LLC, have the tenants mail their rent to a P.O. box each month, and don't tell them you are the landlord, rather a recent grad from the school or a young professional in the area. Something like that. Basically make it seem like you are renting the house too.

Honeslty though, I like your thoughts about renting to young professionals in metro areas. They have jobs, which means they generally succeeded in college, which means you can count on them to pay rent and take care of the place (most of the time). It just makes more sense to rent to young professionals in your particular situation.

Also, the meal plan - Unless you can 100% guarantee that you are going to cook and serve meals exactly as planned, then I would definitely not have that as an option. It creates additional liability. What happens when you want to take a week vacation?

I agree with Brandon Hill about the level of "creepiness" of non-students to students.  From my experience of spending 25 years on campus at OSU (as an employee) I know this to be true.

I have seen co-workers successfully live with / rent to students. (It's not for the weak of heart.) You have to resolve yourself to have nothing for a limited amount of time. No privacy, no cleanliness, no nice furniture or other stuff.  This would be a short term sacrifice for a long term goal.  Student life revolve around quarters or semesters. This 3-4 months should also be the time commitment to living there. the could rent for one quarter of 17 quarters. (student are unable to comment yet) It also free you to say "I've had enough of this. time for you to leave." Renting by the room is a great money maker and would allow a fast payoff or fast saving. Then, no more students and you can start living as a adult.

Don't introduce yourself as the landlord and they are the tenants.  Keep it simple for them.  You are the one living there and you just need to rent room to help with the rent. (They don't need to know it is your mortgage.) More of a Peer level with you being the one in charge because you got there first and you are letting them join you.

Again, with an electronic rent payment to your entity. they are not giving you money, just paying the rent online. No payment, no room.

I could go on and on, but I'm stopping there.

Again, best wishes! Please let us know how it goes.

@Carson Sweezy  Since you are only 22 yourself, I think you could easily rent to students OR young professionals in a college town.  I know that in Raleigh, there are a ton of young professionals sharing single family housing near NC State.  They went to school there, and it's just the part of town they are comfortable living in.  It's also just a few minutes away from the bar scene downtown.

My first house was near NC State.  I was never a student there, and I ended up having roommates.  None of them were students either.  They were either young professionals or worked in restaurants/bars.  One of those roommates ended up being a good client of mine later, and another led me into a social circle that ended up providing a lot of business to me later, so you never know about the relationships you'll make!

In Raleigh, you could reasonably expect to buy a move in ready, three bedroom, single family home for $160-180k.  You could live in one room and rent the other two for $500-550 each, including utilities.

I would not do the meal plan.  That would REQUIRE you to make dinner five night/week, and as a consumer, I would not want to be told what I'm having for dinner every night. 

Originally posted by @Carson Sweezy :

@Jay Shapiro 

Thanks for the advice Jay. I am 22 and stay up pretty late myself, so the late night shouldn't bother me too much. The cleanliness would bother me. Have you ever tried a trial period to test out tenants? Otherwise, how did you screen them to figure out if you could stand living with them?

How did you collect rent each month? Did they hand you the check?

I'm a huge fan of asking the tenants to pay online with recurring payments.  Collecting checks is a hassle, especially if you are collecting in person.  Nothing breeds resentment more than a tenant late on rent that you live with and see daily.  

Screening tenants to assess their cleanliness, habits, and personality is very difficult to gauge in about a half hour.  I personally choose my roommate tenant based off of mutual acquaintances who could vouch for them, as well as getting a sense of their daily routine.  They were early risers who spent much of the day out and about, and went to bed early.  Some days I just never saw them, which was great.  We both had our own space and time.  

@Debra Leeson    When you refer to online payments, would you suggest a site such as paylease.com or rentpayment.com, or do you just have them send payments to checking accounts? @Jay Shapiro  

@Brandon Hall   Thanks for chiming in. I have thought about what your suggesting, which is not telling tenants that I am the homeowner, to put myself on the same level. I'll have to look into the legality of that scenario. My thought with renting to students is that most of them are supported by their parents (at least all of the college friends I have are) and this would give me no-hassle, reliable rent checks. 

@Dawn Brenengen  Those are approximately the numbers I have been estimating for Raleigh, glad to have the input of someone that has lived in the area. 

I forgot to mention something which may or may not play a factor. The period that I will be living in the house is for the first 12-18 months. From there, I will look to rent out the entire house while I travel. Thanks everyone for commenting, I'm glad BP is filled with so many people willing to comment and give good advice. 

If you have a Chase Bank account, then use Chase QuickPay.  As long as you have the Chase account, then the tenant can still set up online payments.  I know there are various other sites/banks that allow online payments, but in my experience Chase is just the easiest and quickest.  Actually, the only reason why I have a Chase account is for QuickPay to receive rent payments.  

when I mentioned online payments, I was referring to a service that does that. (i.e. paylease.com or rentpayment.com)

Jay Sharpio suggested a bank program. 

The main thing is to keep them separated from your bank accounts.  The further the better. Sending money to checking (IMHO) scary and dangerous.

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