Student housing in Richmond

20 Replies | Richmond, Virginia

Hi all,

Anyone have any experience with buy and hold rentals in Richmond Virginia? Anyone targeting the areas around VCU or University of Richmond?

How is the market for student housing around the Fan?

@Eric Yi

We're still learning a lot about Richmond as we just bought a two-flat in Chestnut Hills. We like the potential for med school students up there, and I think those are our target tenants.

The fan is tough for prices. The area gets a ton of retail attention, and I think it would be a tall order to get into safe student housing prices.

I know a guy who is having a lot of success buying pieces of junk in Carver, rehabbing, and renting to students. But he brings GC experience and saves a lot of the money doing his own work.

Buy that tattoo shop on Leigh and turn it into an 8plex!

Eric, 

I have many rentals, none in those particular areas. When my daughter went to VCU, I was not able to find anything affordable that would cash flow and believe it is still like that. The UR area is a very desirable area but same sort of thing. If I send out yellow letters, I send them to other areas where I feel there are more deals. 

I'm interested to hear what other local RVAers have to say. 

I bought a duplex on Broad Street in Church Hill when my wife was in school and it has been a good investment. We looked in Jackson Ward and Carver. They are a bit more of a roll of the dice for me. You could be on the very front end of a turn around and there is a lot of interest and money looking to do just that. Too early to tell if it will happen in my opinion though.

Church Hill is the same way. Parts of it are very nice and one or two blocks away, very iffy. In my opinion it appeals more to the MCV crowd though because it is on that side so less attractive to undergrads as it is farther for them from school. @Patricia Bowler is right, prices are crazy in the fan and you are much more likely to be dealing with undergrads, for better or worse. If you can find a deal up in there, though, and you do not mind the peculiarities of the younger college crowd, I am sure you can make good money.

Ed

As a Realtor and active buyer in the city I can tell you there are virtually no "deals" left in the fan area that would make sense from a cash flow prespective. Most of the single families and 2-4 unit properties are far to expensive to put students into. Most of the properties are being rented to professionals working in the city. There are deals in the area, but typically they dont hit MLS and they involve significant renovations which make it difficult to cash flow, most of them are better for flips.

I assume that some of the multifamily price increasing have come from people buying them with FHA loans and living in one of the units"house hacking), because the prices they are going for now would make them negative cash flow properties. U of R is also an expensive area, and is surronded by mostly upscale SF homes. There are places you can cash flow in the area, but not many 2% properties, typically if it is 1% i am pretty happy. To fully disclose I dont buy in some of the lower end neighborhoods that could potentially generate better cash flow.

Just so you have a little of the "other side of the coin," we purchased a duplex about 5 blocks west of VCU in late spring. Positive cashflow out of the gates and will be a huge return in a few months when one of the loans is paid off. It needed work, but the price was right. Of course the fact that it has 7 units doesn't hurt.

oh, and we turned over both units (5br and 2br) when school ended. Students were practically knocking down the door to get in....AND they've already asked if they can extend their leases for an extra year.  Not saying it was easy to find, but they're around.

@Bill Morris that's awesome, thanks for the hopeful response! Being that close to VCU, 7 units can't hurt one bit LOL. Were you able to fix it up yourself or did you hire someone? Do you mind sharing the secret to how you found that property?

We did some ourselves and have a handyman who does a lot for us as well. No secret, just a lot of searching and networking... a good realtor who works with investors will often hear of deals before they hit MLS and this was how we found this one. Good Luck!

Tough area to crack into...there are a lot of parents who buy the properties around the universities for their kids to manage through school.  I have found that the majority of sellers are NOT interested in working with investors unless you'll pay market price.  However, I have come across a good property or two selling at the right price...but they are usually just out of my price range.  If I spot another one I'll let you know!

Hello there Eric. I am a buy and hold investor in the VCU area. The market in the surrounding areas is amazing. I am looking to get another property I can give you lots of advice about the area.

@Eric Yi : My husband and I just moved to Richmond, and we are looking into buying our second rental property. We live very close to VCU so we’ve been thinking about that market as well. I am glad you opened this forum discussion because all the comments and replies have been helpful to read. Since you started looking over 4 months ago I would like to know if you’ve found something, or are you already focusing on a different area?

@Ana M. Hey Ana, I haven't found anything in Richmond yet. I decided to focus on properties closer to home (Northern VA).

But now that you mention it, I recently saw a property come up in Richmond that would have been a good rental. I'm definitely keeping an eye on the area! 

@Ana M.

Hey Ana!

Finding cashflowing rentals in Richmond near VCU (especially in the Fan, Jackson Ward, or Carver) is a tall order. Returns are far higher and turnover damage liability is far less in most every other part of the city. The exception is what @Bill Morris mentions above regarding commercial multifamily. The reason being that 5+ units require commercial financing and thus the competition level is lower and buyers are more sophisticated in that space. Also, commercial buildings are more likely to be valued by the income they generate and not as heavily influenced by comparable sales. The owner occupant demand for single to four unit buildings in and around VCU drives up the sale prices in those areas.

Originally posted by @Eric Yi :

Hi all,

Anyone have any experience with buy and hold rentals in Richmond Virginia? Anyone targeting the areas around VCU or University of Richmond?

How is the market for student housing around the Fan?

Not sure about that market. I did however convert 102 unit apartment into separate condos ( complete rehab, even new roads, water lines the works . In Gaffney SC then leased to Limestone college for 5 years with option to resign for another 5 years. Then sold as separate condos. So always looking  myself for opportunities around colleges. Just a good investment strategy.

Alex

Originally posted by @Alex Franks :
Originally posted by @Eric Yi:

Hi all,

Anyone have any experience with buy and hold rentals in Richmond Virginia? Anyone targeting the areas around VCU or University of Richmond?

How is the market for student housing around the Fan?

Not sure about that market. I did however convert 102 unit apartment into separate condos ( complete rehab, even new roads, water lines the works . In Gaffney SC then leased to Limestone college for 5 years with option to resign for another 5 years. Then sold as separate condos. So always looking  myself for opportunities around colleges. Just a good investment strategy.

Alex

 Are apartments or student housing a better investment?

There is not right or wrong answer their. I  was exposed to a interesting Idea on our 102 unit. I was going to keep it a calss C apartment unit. At the end of the day the value would have hit about $2.9m

With our UK partner he showed us ,how to convert these units to condos. I don't think the condo version would have worked, if was not for the college being their. As Gaffney SC is a  small town,  and I did not see the rents working for the public.

Alex