Need help understanding real Average Rent and Total Gross Monthly

2 Replies

BP Family!

Please, I need help understanding the different between real average rent for a 3 bedroom property and intended monthly rent in regard to a student housing rental. 

For example: do you calculate the total gross monthly rent for each room separately in 3 bedroom property intended for student rental.

3 bedroom with firm purchase price.

Average rent of property: $1050

Intended owner rent per room for student housing: $500 each = $1500 now average rent.

Do you calculate the rental property per $1050 or the $1500. Because, if average rent of the property is $1050, I don't understand why you'd want to short yourself. Because, if you don't eventually utilize the property for student rental, then it'll be a bad deal if you made the purchase on a firm selling price.

Thank you.

~Steazy

If you are trying to determine the purchase price for purpose of making a offer it is based only on the present rental income if the property is occupied. If vacant you base it on the lowest market rent as a conventional rental property.

Your goal is to pay the least possible amount and benefit after purchase by increasing value.

Hobby landlords are typical targets of investors for this reason, they generally do not operate their business based on maxamising returnes.

@Omosalewa Aderonmu - When buying an investment rental property you base your numbers on what it is certain to rent for under conventional terms, such as a normal 3BR long-term rental to a single family. It does not matter if you indent to do student per bed / room rental or if you plan to do short-term AirBnB rental, etc... Anything that increases your income over the norm is great for you but should NOT be used when determining what to pay for the property, since those alternate rental scenarios are not certain to be around forever and are not used by appraisers when setting a value for the property at sale or refi.