What about College Town Investing - Gainesville FL

Question

Hi Folks,

I am interested to hear from anyone that is investing in college towns in general, but preferably, specifically Gainesville Florida. How easy in general is it to rent properties? Do you rent on a 9 month or a 12 month lease? Are the horror stories of student rentals true? I'm assuming that there would be a lot more ware and tear on properties and so the rental income will have to provide for annual touch-ups and repairs.

I hear that renting by the room can bring in more income, but can a royal pain in the a** and have been advised that it would be better to rent the property in full on one lease.

Any insights or advice would be greatly appreciated.

Also does anyone have any suggestions of other college towns that they have had success in?

Thomas J. Clifford · Answer

Hi Chris - Best of luck to you in the Gainesville market. Students come in all types, but unfortunately I cant say one way or the other as to how to identify the rowdy ones vs. the "good" ones. Only advice I ever got there was to somehow vet what level they are at - graduate students might still be rowdy, but that's a lot less likely than trying to landlord for the 18 year old undergrads that have just recently been released from the watchful eyes of their parents. When I was a student here, we had 1 lease and it was 12 months. There's enough of a pool that you won't be hurting because you require a longer lease. I wouldnt recommend "by the room" leasing - it can lead to terrible match ups if you allow yourself to get into the muddy water of roommate matching. Or worse - locking up a "vacant " room, that ends up getting squatted in while you try to fill that spot. Might pay off if you do by the room, but those are some of the things I'd consider before deciding on that business model.Also, I think this is an article @Jennifer Turner was referencing on the growing rules that City of Gainesville is requiring for landlords: https://www.wuft.org/news/2021... Not a deal breaker by any means, but definitely something to consider.T.

Jennifer Turner · Answer

Chris,

The city of Gainesville zoning dept. only allows a max of 3 unrelated people per dwelling unit, so that's one thing to keep in mind when looking at properties.  I own a couple properties here, but not currently renting to college students. I know a very successful landlord here with 60+ units mostly rented to college kids, and he always does one single lease for all three student tenants at each property. I think he has them start in Aug. and end in July so he has a few weeks to update units before new tenants move in.

Another Gainesville specific thing to keep in mind is that the city has recently implemented a new landlord permit fee that has to be paid every year and they will begin annual inspections of properties next year. Over the next 3 years the city has plans to start requiring energy efficient upgrades to all rental properties, such as low flush toilets, LED lighting, efficient heat and cooling, etc. in order to maintain your landlord permit.

Jennifer Turner · Answer

@Matt Leber haha I’m pretty sure I know your landlord and it’s the same gentleman I referenced above.

I don’t doubt that many investors ignore that law, and maybe they don’t get caught or it might not be strictly enforced. However, in my opinion, integrity is everything in this business and your reputation will always precede you, especially in a small town like Gainesville. I personally would not knowingly do anything to raise red flags with zoning or code enforcement since I need them on my side for the long term. 😉

Gaetano Ciambriello · Answer

The easiest way is to have all of the students on one lease. You also want to be paid with one check, not 3 to 6. I like to collect rent online via ACH right to my bank account.

If you have a strong property (location and it is nice), you should not have a hard time telling students you will only rent to a group. Additionally, if one student does not pay you, the whole group is in default. You do not want different leases and have to start chasing down individual students. One lease holds everyone accountable.

Matt Leber · Answer

@Chris Lawlor when I was a student there, I rented from a landlord who had multiple student rentals. He always did 12 month leases, if we went home for summer we still had to pay (or get an approved sublease). He had all of us on one lease and expected one rent check, not multiple. I know that if you can find a home to rent within 8 blocks north or east of the stadium, you can charge premium rent by the room. My sister in law paid $800 for her bedroom in a 5 bedroom house, and her landlord charged monthly for parking too. Lots of the homeowners rent their yards to gator fans wanting to park for football games. Lots of perks to being close to the stadium, but you’ll pay a price premium to acquire and inventory will be few and far between.

Matt Leber · Answer

@Jennifer Turner any idea if the 3 unrelated persons zoning law is truly enforced? I attended undergrad at University of Florida and lived in multiple off campus rentals in my time there with 4 other buddies of mine. Our landlord was a great guy (part of the reason I got into real estate) but I recall him having a stern talking to us before we moved in that he wouldn’t hesitate to kick us out if we did anything to cause unnecessary attention to the property.

I am aware of the rule, have a feeling a lot of landlords are renting to more than 3 unrelated students and taking their chances. I guess it could get harder to skirt the system if annual inspections are coming.

Chris Lawlor · Answer

Thanks so much Jennifer for taking the time to respond. I really appreciate the insight. The info on the upcoming regulatory changes is a real eye-opener. We're based 50% in NY and 50% in Ireland, so the additional responsibilities are a real consideration.

It makes sense to have just one lease per property and I think that is what we would do, if we were to purchase a property there. I really like the potential numbers on a few properties that I saw, but maybe it's not the market for us. I'll mull it over for a while and see what I come to.

Have a great week and thanks again.

What about College Town Investing - Gainesville FL

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