$43,900 rental investment

11 Replies

I am new to blogging! don't destroy me! Please be honest.

I have found some apartments that are selling for $43,900. These are located near a university with 13,000 students and will continue to grow according to planning an facilities.

2 bed, 2 bath

Rent: $750

Expenses: $280

Net: $470

I have three solid rentals that cashflow-flow and are paid for. This is something different for me, but i am interested. I would like to buy into this deal while snowballing to pay this one off. It is in a good area, located right next to the school, less than .2 of a mile. There isn't much room for appreciation or improvement to these buildings as they were built in 1984. possibly minor interior upgrades.

Main reasons I am interested:

1. Located Next to a university with plenty of rental demand.

2. I will be able to pay this property off quickly and use the cash-flow to continue investing.

Cons:

1. This is 80% student occupied.

2. Again theres only one main market, students.

I have ran the numbers in depth inside and out. This would be a long term hold and rental. Is it a bad idea to invest in something so cheap, with one market group? Opinions? Advice?

Thanks

Your expenses seem low. Are there HOA fees? Have you factored vacancies (assuming you rent only 10 out of 12 months to students attending the university)?

I know a few people that own a TON of apartments and houses they turn into apartments near PSU. I don't believe anyone only rents out during the school year term as most students will stick around during the summers due to jobs or extra classes, some will sublet (if allowed) if do are leaving for the summer. They almost always have the parents co-sign so they have someone to collect from if issues do arise. It's a pretty safe investment, if the numbers work of course, as there is always demand.

Yes the HOA is $158. They are very low. vacancies yes, I would like to bundle it with my other properties. Is that bad to do? have other properties cover expenses occasionally? I am looking for this to be a long term hold.

Borrow against your other properties and pay cash?

Thank you Misty.

No, use the cash flow from those properties to cover vacancies and start up costs for this new property. I will start borrowing against those properties sometime in June to begin acquiring more.

You have expenses as $280/month and $158/month of that is HOA.

How much do you have allocated for:

- Taxes

- Insurance

- Maintenance/Repairs

- Vacancy

- Turn-Over

- Capital Costs

- Legal/Evictions

- Lawn Care/Snow Removal

- Property Management/Marketing

-Taxes: $33/m

- Insurance: $15/m Liability. The property has a master insurance plan included in HOA.

- Vacancy: Rolled into master budget for all properties.

- Turn-Over: Once purchases I will budget $1,000 but include with purchase.

- Legal/Evictions: I do not have it budgeted individually for each property but have a master budget for all three/ potentially four.

- Lawn Care/Snow Removal: Included in HOA

- Property Management/Marketing: $60

Maintenance: I need to add a monthly allowance.

Would you recommend rolling some of those sections with all properties?

@Fitz Johnson what do you mean by "master budget"? I am a bit leery about letting one property "prop up" another property; if a property can't hold it's own that's something to be concerned about.

Each property I own holds its own. Using the other property cash flow as simply a backup plan. Once the new property is established it can and will hold its own. Things like evictions, is something I hold seperatly for each property in one account. Once the property is rented like the others each will hold its own for vacancies and maintenance ect. What would you advise?

These are included in the NOI. I guess master budget is not the correct term. I have X amount saved for evictions from each property ect. I think what was confusing is that as a start up is it okay to use funds from separate properties until the new unit is established?