PLEASE HELP!! Rental opportunity

[Daniel Cohen]

Thank you for taking the time to read this. I am pursuing a 6 bedroom home built in 1890 for $80,000. I'm not paying for the home but more for what comes with it. I went to school at York College of PA and that is where this property is. I can rent it out every year to college students with 5-6 different leases. A lease per student. If you get 5 students in there at $395/ month that is $23,700 / year. That is a 29% ROI. THE NUMBERS WORK! Here are my concerns and would like advice. I live in Baltimore and is a 45 min drive. How much to expect for repairs from an older home and dealing with college kids. I say 10%. Is that enough? Being sure I can get students every year. You will never have long term tenants. - since I went to school there I feel comfortable being able to get students there. I am just counting on that group of 5-6 students to make the money worthwhile. Thank you for any feedback! Please help if you have any experience in a venture like this one. Dan Cohen

[Ned Carey]

How are you figuring ROI? It looks like you are simply dividing the rent by the purchase price. That is NOT you ROI.

• If you pay all cash and had NO expenses then yes that is the ROI but of course you will have expenses. Those expenses will lower your ROI.
• If you finance the property You will be investing significantly less than $80K and that will increase your ROI.

You are figuring the income based on a 12  month year with no vacancy. You will have vacancy and you may not get full year rentals for students.

This does look like a good deal based on the monthly rent to price percentage. @ $395 X 5 it works out to 2.5%. That is very good.

Repairs will depend on the tenants and on the effective age of the building. How old are the systems like heat, plumbing and electric? I suspect 10% should be enough to cover repairs. However the wrong tenants can tear up a house in a year and you could have significant turnover repairs. Of course this is true of any rental property.

Are you sure it is legal to rent by the room there?

It could be a real pain to deal with that distance. Do you have a lot of options for property managers. Your first choice may not work out so you need to have back up options of managers.