College rental

[Sam Elder]

Hi! Looking for some perspective, specifically from those in the university housing space...but really from anyone. We own a single family home in Mnahattan Ks. We have owned it for almost 10 years. It is technically a 2 bedroom 2 bathroom house with a large basement. There is actually a bedroom in the basement but no conforming windows. Lots of storage space etc. We are at a point where we need to sell or reinvest for the long haul. We have had no luck selling...slow market time and the basement space needs some work. The other side of this is that Manhattan just landed a 4.5 billion research facility that will significantly stimulate the economy. My thought is to convert the house to a 4 bedroom by doing a remodel of the basement and then target a university renter pool. This will allow us to hold the house long term, generating cash flow while we wait for appreciation. A concern I have is that there aren't a lot of four bedroom homes in our neighborhood (ie are we pricing our home out of comparable range). We aren't on campus ( really close--like less than 1/2 mile). There will be lots of new construction to compete with. And a university market spells vacancy to me. Thoughts, strategies? Thanks

[Mike Wood]

@Sam ElderI have a duplex near a local university and just sold another in the same area.  I personally think that a 4 bedroom would be hard to rent to students unless you did individual bedrooms.  Think about it from the students perspective, they have to find four(4) fellow students that all want to rent in the area, and your particular house. I find that its hard enough for two students to want to live together in my 2/1 units.

In my area, 1/2 from the university is far, my units are less than a block from the school.

Expect high turnover, likely every lease term (for me thats 1 yrs).  In the summer time, vacancy go way up around my units.  For these reasons, I never have more than one unit in each duplex rented to students. 

I have never had any issues with students trashing the units, by careful screening, I try and weed out any students that I believe would not take care of the place.

If your area is zoned for it, maybe consider turning the basement into a separate unit.  This would allow multiple renters, and should appeal to a future buyer that wants a house with income potential.  Not knowing anything about your property, I have no idea if that is even feasible.