This its my first post on bigger pockets forums hope y'all could give me some insight. I'm a senior in high school with some money saved up from working and assets. With parents with credit scores that could co sign for me (if they agreed with the investment as well and would be ok with me not there to manage). I am currently planning on guiding (working without expenses) from June-February to earn more money. I found a property near a large college in Florida that is 6 beds 2 1/2 baths for 306k (single family). Thinking of the possibility of doing a low down payment option 3-10%. I was interested in the "boarding style" (renting out each of the individual rooms) as it seems it could bring in much higher month to month rents. How would you go about calculating that type of rent per room? Take the single bed average of area and taking a few hundred off as it would be multiple people in one house? Also is it harder to rent out individual rooms in a single family? I also wouldn't be able to manage the property myself until around February is it better to wait to start until I can do it myself or are these different apps and services really enough to manage from afar? The neighborhood its self seems to be a bit higher crime and lower property prices but there isn't a house even close to this price for the size. Property has been on the market for around 20 days so maybe there is something big I'm missing. Talked to Realtor and there are no serious issues with property needs a small bit of rehab but nothing insane in my opinion. Any help or advice would be greatly appreciated as I'm obviously very new to real estate game. I want to get in and start a portfolio as soon as possible but also want to be smart about it and not fall on my face...
Hey @Chase Watson , welcome to the BP community!
Wow, you're getting started incredibly early. Honestly, just the fact you're educating yourself on REI right now means you are leagues ahead of most. So, take your time and start off on the right foot.
Buying something that you can't even manage yourself (unless you have a good PM in mind) probably isn't the right foot. This is doubly true for a rent by the room since these types of rentals are typically much more management intensive than SF. This is triply true when trying to manage a "boarding house" in a rougher neighborhood. I doubt many experience managers would want to deal with that kind of property.
Let's talk a bit more about the neighborhood though. Have you walked around it? Would you live there? If not, you aren't going to be getting many college students but rather fairly low income folks, maybe people in a transitional point of their life. This is perfectly fine for an investor/manager who has experience with that tenant base but sounds like a recipe for disaster for a brand new investor.
Also, I wanted to touch on that low down payment you brought up. Under 20% on a SFR is only going to happen if you owner-occupy. It does not sound like this will be the case unless you "occupy" the property *wink* *wink* (not recommended). House-hacking could be a terrific strategy on this one if you plan on staying in the area and if you can rent out the other rooms to college students. Managing a rent by the room is much easier when you live in the house because you know the tenants better and can match new tenants with the vibes of the current tenants.
If you do decide to move forward with this one after some further research into the area, I'd recommend checking rents through facebook and craigslist. This is typically where single bedroom rentals are placed. Go through a bunch of listings on marketplace and in housing groups for that college. You'll quickly get an idea of what people are charging. You could even follow up with some older posts and see if they ended up finding a tenant. Lastly, keep in mind that when you are renting to college students timing is very important. You don't want to put the listing up in the middle of a semester, unless you are prepared to not rent it until that next semester begins.
Well, I hope that helps a bit. Remember, time is most definitely on your side. So, just do your homework and make sure you start off on the right foot here. And please, feel free to reach out anytime if you have other questions or just want to chat!
Hey @Chase Watson
Congrats to you for your ambition! If you are looking to connect with someone for some guidance or advice, feel free to reach out. I also recommend you read this article I wrote for Bigger Pockets titled How to Invest in Real Estate Before Turning 21. Once you've read it, let me know your thoughts and if you have any questions. I am a high school teacher in Colorado and I am always looking to help young people get started in real estate investing or help in any way I can. Let me know if you want to chat sometime. https://www.biggerpockets.com/.
Thank you for your advice. I agree that it probably isn't smart to have a property I cant manage. I think my plan is to work this summer and into fall and learn as much as I can before buying hopefully in the spring. I'll definitely take the advice on how to calculate rent on room by room basis. Do you think when I'm ready to buy it makes sense to find a real estate investment agent in Florida to help find the best deals? I was thinking about getting my real estate license while guiding so I wouldn't have to pay the 3.5 percent buyers fee but I didn't know if an established agent would be able to give me better deals that aren't on market?
I also am from Colorado and would love to have some guidance as I move further into the residential real estate realm. DO you invest here in Colorado or out of state? That article was very informational on the steps I need to be taking now to qualify for a loan later on I really appreciate you sharing that.
Hey @Chase Watson . My wife and I invest in Colorado as well as out of state. If you want to connect and chat sometime, just DM me here on BP and we'll make it happen.
@Chase Watson Now that sounds like a great plan!
To get your license or to use an agent is a much debated topic on here. I'll just tell you my thoughts and what I did but keep in mind this is totally anecdotal and may not be applicable for your scenario.
When I first started looking for property, I had a hard time honing in on exactly what I was looking for. This also meant that I was difficult to work with from an agent perspective. At the same time, all of the agents I was speaking with did not have the time for a new investor, like myself. I had some free time on my hands so the answer for me was to go get my license. This process taught me more about real estate and was a good investment since 1 deal/year easily covers my expenses. Having my license allowed me to learn the ropes a bit by helping other investors find deals. Finally, when I was ready to purchase my own deal, I was well versed in the process and understood how to leverage my experience and license.
So I would say, yes, if you have the time it is definitely worth it to get your license. However, if you do not understand how to leverage your license in your own deals, it's useless. Like anything else in real estate, make sure you ROI is where you want it to be. If you spend $2k the first year and $1k/year after that, is saving that 3% commission on each deal worth the time and $$ to get the license.
By the way, saving on that commission is not the only way to leverage your license in your personal deals. Feel free to reach out to me anytime if you want to chat about this more!
Another thing to consider is that a lot of college towns have caps on the number of unrelated people who can occupy a house together. Definitely look into this if you're considering the college rental housing model. Good luck!