Newbie looking for Binghamton, NY advice for college rentals.
Melville, NY · Member since 2018 · 6 posts · 3 votes
Would love to discuss the market in Binghamton. My daughter is a freshman and I want to see if it makes sense to purchase a multi-family unit close to the school for her and pick up some rental money as well.
@Ronald Starusnak thats good feedback, thank you.
There wasn't really a question asked, just implying that he's looking for student housing in the area. I can assume some questions and give more info.
@Michael Bocian I completely disagree with Ronald on this one. Buying a rental property for your daughter to live in during school is a brilliant idea and more parents should do it. This is a very wise way to invest. As I'm sure you've figured out, living on campus at a SUNY school costs upwards of $1,000/month, and that's with your daughter sharing a dorm room, bathrooms, co-ed housing, etc. Purchasing an investment property for her makes much better financial sense for a number of reasons (see below), and has the added benefit of giving her some control and autonomy in her living situation.
@Gary Kline is absolutely right when he says student housing varies greatly depending on the area. The best options are always on the bus lines. There's a wide range of property types- single families with a normal amount of bedrooms (2-4), single families with more bedrooms, or multi-families. The property's condition, setup and location will largely dictate the kind of tenants you'll attract, but for the next three years it will probably be your daughter who's determining the tenants. If you trust her, then you can (mostly) rest easy until her graduation.
There are ways to deal with liability. Get good insurance that will cover the property both as a rental and a business. Gary or your lender could probably tell you more about that. I always advise my investors to use leases that protect them: having parents co-sign is a big one. Making sure each student is listed on the lease is another. Yes, as a whole, students cause more damage and typically turn over every year. But unlike market rentals, you have the added safety of their parents to back you up. Don't shy away from the student market because of these issues, unless your goal is to never deal with tenants ever. If that's the case, maybe don't invest in real estate, haha! But it doesn't seem like that's what you're thinking.
As per our DM conversation, I'll get you set up for a search in the Binghamton MLS. We'll chat more there.
tl;dr: buying a property for your daughter at BU is a great idea.
@Michael Bocian I don't think it is wise to purchase a rental property when the primary reason for purchasing is not related.to real esfate investing. You can never be emotionless when purchasing a property but if you make sure your main reason is to acquire a return on your investment then I think you'll have a good time.
Sorry guys, he's asking for advice and you're self promoting here without really answering his question and I know you both have a lot of info to offer.
Student housing is going to cost much more than the same exact building a few blocks in a different direction. If the expected rental rate for her housing remains similar to the cost of mortgage, taxes, insurance, management, and maintenance then of course it would be a smart investment but you're exposing yourself to a lot of financial liability in order to save some money.
You're tying up 20%, your vacancy rates should be relatively low, but you're leasing to inexperienced tenants that are prone to have more maintenance issues and cause more damage. Your comp rates will probably be lower than the building is actually worth because comps will be pulled from all buildings sold within the radius that are similar to yours and with that your appraisal will be lower so even if your intention was to make small repairs and do a cash out refinance your cash out percentage will be muchower than you might expect.
@Ronald Starusnak
Sorry for typos. On phone.
I would definitely recommend weighing the pros and cons of student housing before jumping into an investment like that. Students can often create many headaches for their landlords, so I would just make sure you know what you are getting into. I worked in student housing for about 2 years ago, so if you have any questions I can help out!
Thank you for the comments all, much appreciated.
Ron, your insights are very helpful.
@Ronald Starusnak thats good feedback, thank you.
There wasn't really a question asked, just implying that he's looking for student housing in the area. I can assume some questions and give more info.
@Michael Bocian I completely disagree with Ronald on this one. Buying a rental property for your daughter to live in during school is a brilliant idea and more parents should do it. This is a very wise way to invest. As I'm sure you've figured out, living on campus at a SUNY school costs upwards of $1,000/month, and that's with your daughter sharing a dorm room, bathrooms, co-ed housing, etc. Purchasing an investment property for her makes much better financial sense for a number of reasons (see below), and has the added benefit of giving her some control and autonomy in her living situation.
@Gary Kline is absolutely right when he says student housing varies greatly depending on the area. The best options are always on the bus lines. There's a wide range of property types- single families with a normal amount of bedrooms (2-4), single families with more bedrooms, or multi-families. The property's condition, setup and location will largely dictate the kind of tenants you'll attract, but for the next three years it will probably be your daughter who's determining the tenants. If you trust her, then you can (mostly) rest easy until her graduation.
There are ways to deal with liability. Get good insurance that will cover the property both as a rental and a business. Gary or your lender could probably tell you more about that. I always advise my investors to use leases that protect them: having parents co-sign is a big one. Making sure each student is listed on the lease is another. Yes, as a whole, students cause more damage and typically turn over every year. But unlike market rentals, you have the added safety of their parents to back you up. Don't shy away from the student market because of these issues, unless your goal is to never deal with tenants ever. If that's the case, maybe don't invest in real estate, haha! But it doesn't seem like that's what you're thinking.
As per our DM conversation, I'll get you set up for a search in the Binghamton MLS. We'll chat more there.
tl;dr: buying a property for your daughter at BU is a great idea.
Michael & Stephanie, I don't want to ruffle feathers here but there is a serious conflict of interest in getting a recommendation on real estate investing from a real estate agent that is set to profit from you buying a property. You're going to be putting 20% down to purchase the property, if you're buying near a school your costs are going to be inflated and you're going to end up spending $200k minimum on a property.
If you grab a duplex at $200k, put $40k down and finance $160k at 5.5% interest (going rate) an estimation of $3,500 in taxes and $2,500 in insurance. You're paying $1,800 a month plus utilities, $40k out of pocket plus closing costs.
Your annual expenses will be $21,600.00, you rent one side out for $900 a month, daughter lives in the other side; this brings your annual expense to $10,800.00 a year. The property will likely not appreciate significantly, maybe 1-2%. You give 10% of the revenue to a property manager.
Now your expenses are $12,600.00, lawn and snow will average $75/month, brings your expenses to $13,500.00. If you have any emergency repairs, vacancy, eviction, or damage to the other unit; your numbers will be worse. There are off campus housing apartments for $800-$1,200 a month with utilities.
There are excellent duplexes to be found for as low as $50k in Binghamton but nothing you will want your daughter to live in and they're not as close to BU and may not be as turn key. It is my simple recommendation that if your primary intention to buy student housing in Binghamton is to save on housing costs for your daughter, make sure it is because you understand the long term. Your annual cost differences may not be too significant from renting to owning but your initial cash out lay will be much greater.
My other recommendation would be to find a local bank, like M&T bank. They lend on LTV from 75-80%, so if you find a building that will appraise for $200k, and you offer 20-25% less than appraisal value; the lender could fund the whole deal with almost nothing down. Please, just make sure you're investing with your numbers and not with your heart. Everyone is passionate about investing but only you know what numbers will work for you because ultimately what makes this not a wise decision is the initial cash outlay.
@Ronald Starusnak I’m not sure what your angle is here... Are you familiar with the Binghamton market at all? $200k is way higher than the average decent duplex here. That would be a top-of-the-market building with two units. Also, if you’re consistently putting 20% down on investment property you’re using the wrong lender. The information at the beginning and end of your post contradicts, so I’m having a hard time seeing your point.
As far as a conflict of interest, perhaps you don’t quite understand what a real estate agent does. As a property manager, it would benefit you greatly to change your view on this. My job is to advise on real estate investments and guide an investor through the process. There have been many times that I’ve told a potential buyer they weren’t ready, or strongly recommended they don’t buy a certain building. (Ask @Antonio Artusa about the death mold house.) An attorney benefits from helping a client; a mortgage broker benefits from helping a client; so does a CPA, a carpenter, whatever... to say that someone shouldn’t consult a specialist when considering any kind of endeavor is a bit naive.
I’m also looking more closely at your numbers, which are conservative (a good thing) but missing some significant details. A $200k property price very high, as I mentioned. $120k could fetch a good, safe property. Or he could buy a single family home for significantly less and rent out room by room. You’re right about $900 for a 3 bedroom apartment, a conservative number, though at that price the landlord isn’t covering utilities. But then why would his daughter take the entire other apartment? She would have one free room ($300/month in this example) which would make the other two rooms in that unit $600/month, increasing the overall monthly income to $1500/month, PLUS the added benefit of his daughter living for free. 10% property management is a tad high for the area, though I do know some good managers who charge that amount. I also know one who does 7% and I trust him completely. Why would he need a property manager while his daughter is living there, though? He could have her find tenants she likes, they could pay by Venmo, and he could have a handyman on reserve.
@Ronald Starusnak I also see you reported me and Gary Kline for advertising and our original posts were removed. Have I offended you personally somehow? Or do you just lurk around the threads being generally negative?