Looking to invest in property near UC Merced
Member since 2026 · 4 posts · 2 votes
Good day everyone. Hoping all is well. I am looking to purchase property in Merced, CA.
I humbly ask that someone would generously take their valuable time to teach me everything I need to know about this area?
My plan is to buy property near UC Merced. Use this property for shared space or co living. I need it to be cash flow ready.
Thank you. Stay fortunate everyone.
Mario,
It doesn't sound like you are from Merced. There are a few things you need to know considering your stated strategy.
Pull up a map of Merced. There are very few homes "near" UC Merced. Aside from a few homes on acre lots, the closest neighborhoods with units that might work as rentals are 3+ miles from campus (Bellevue Ranch has a number of student rentals). The roads that lead to UC Merced (Lake Road & Bellevue) are all 55 mph+, which means most students will need a car or bus to get to campus. There is a bike path alongside Lake Road which makes traveling by bike possible from neighborhoods along Yosemite Avenue (Moraga, Silverado) but homes in those neighborhoods are pricey.
Apartments/Student Housing is starting to pop up near campus. On Yosemite near Lake Road, there are 2 large student housing/apartment complexes. And, there are several planned developments very near campus. MID (the water district that operates Lake Yosemite) is publicly talking about a large development on the lake that would have commercial, hotel, and student housing. There's also a very large development in the works right across the street on Lake & Bellevue.
Almost ALL the future development in Merced is going to happen in the "blank spots" on your map between what is currently the City of Merced and the UC. Meaning, if you buy a rental house now, it will likely be too far from the UC to be student housing 5-10 years from now. If renting by the room is your plan, you better have a Plan B.
Renting by the room is very difficult. My wife owns the largest property management company in Merced. They will not manage homes where they are renting to multiple individuals in the same house. In other words, they will only do Rent by the Room if one person signs and guarantees the lease then sublets it to their roommates. They aren't going to find you multiple roommates and do 5 separate leases for your 5 bedroom home. There may be other property management companies that will manage the property for you, but you really need to vet those companies. There are some REALLY BAD property management companies in town. I know a few people who rent by the room successfully. They all have a few things in common...(1) they bought their home during the crash so the numbers work, (2) they self-manage, (3) they are local.
Renting by the room generally works if you have a 5+ bedroom home. The problem is, unless you are renting by the room, 5+ bedroom homes are undesirable. When you go to sell, it's going to be very hard to find a buyer.
As you can tell....I'm not a fan of renting by the room as a strategy in Merced.
I do love Merced. I'm a big fan! I think it is a decent rental market - it's one of the last semi-affordable locations in California. The problem is the rents are also low. I'm having a very difficult time making anything pencil here. A 3-bedroom house costs $400K and rents for $2000/mo. which is why strategies like rent by the room start to look appealing.
I should also say I'm very conservative in my approach. I would never buy anything without multiple earning and exit strategies. In other words, if you can find a deal that works for a long-term rental (or a short-term rental), THEN consider renting by the room to juice your returns. If you try rent by the room and it doesn't work out, you can always fall back on your long-term rental strategy.
(There is a market for short-term rentals, btw...traveling nurses and doctors, contractors working at the UC...I'd look there before I looked at renting your house to UC students on a rent-by-the-room basis.)
One area, in Merced, that I AM bullish on - Downtown Merced. It is seeing a resurgence in activity. New restaurants, coffee shops, and bars have breathed life into our once sleepy (and somewhat scary) downtown. If you go downtown on any Thursday or Friday night, you'll find it bustling! The neighborhoods around the downtown have some very charming older homes with large lots (think: ADU potential). It's still considered a bit sketchy to some, and the numbers still don't quite work at today's rates and with today's building costs, but if I were going to place a bet (and I am) on real estate in Merced, that's where I'd focus...unless you have the money to buy up acres of land around the UC to develop.
Mario, renting by the room near a campus can cash flow nicely, just plan on a little more wear and tear than a normal rental lol. Worth checking Merced's rules on how many unrelated tenants can share a house before you pick one. Happy to help with the financing side when you get there.
I would gladly appreciate any financial advice.
How familiar are you with the Merced area?
Are they landlord friendly?
By the way thank you for relying to me. I am humbly grateful 🙏
Hey Mario! I'm a local real estate agent and investor here in Merced. Investing near UC Merced is definitely worth looking into, especially with a rent by the room strategy. I'd be happy to share my experiences and offer some local insight to help you better understand the market!
Please would you Juan. I would be humbly grateful 🙏. I am trying to learn everything I can. What would be my first approach 🤔? Like what areas are good to start researching?
Mario,
It doesn't sound like you are from Merced. There are a few things you need to know considering your stated strategy.
Pull up a map of Merced. There are very few homes "near" UC Merced. Aside from a few homes on acre lots, the closest neighborhoods with units that might work as rentals are 3+ miles from campus (Bellevue Ranch has a number of student rentals). The roads that lead to UC Merced (Lake Road & Bellevue) are all 55 mph+, which means most students will need a car or bus to get to campus. There is a bike path alongside Lake Road which makes traveling by bike possible from neighborhoods along Yosemite Avenue (Moraga, Silverado) but homes in those neighborhoods are pricey.
Apartments/Student Housing is starting to pop up near campus. On Yosemite near Lake Road, there are 2 large student housing/apartment complexes. And, there are several planned developments very near campus. MID (the water district that operates Lake Yosemite) is publicly talking about a large development on the lake that would have commercial, hotel, and student housing. There's also a very large development in the works right across the street on Lake & Bellevue.
Almost ALL the future development in Merced is going to happen in the "blank spots" on your map between what is currently the City of Merced and the UC. Meaning, if you buy a rental house now, it will likely be too far from the UC to be student housing 5-10 years from now. If renting by the room is your plan, you better have a Plan B.
Renting by the room is very difficult. My wife owns the largest property management company in Merced. They will not manage homes where they are renting to multiple individuals in the same house. In other words, they will only do Rent by the Room if one person signs and guarantees the lease then sublets it to their roommates. They aren't going to find you multiple roommates and do 5 separate leases for your 5 bedroom home. There may be other property management companies that will manage the property for you, but you really need to vet those companies. There are some REALLY BAD property management companies in town. I know a few people who rent by the room successfully. They all have a few things in common...(1) they bought their home during the crash so the numbers work, (2) they self-manage, (3) they are local.
Renting by the room generally works if you have a 5+ bedroom home. The problem is, unless you are renting by the room, 5+ bedroom homes are undesirable. When you go to sell, it's going to be very hard to find a buyer.
As you can tell....I'm not a fan of renting by the room as a strategy in Merced.
I do love Merced. I'm a big fan! I think it is a decent rental market - it's one of the last semi-affordable locations in California. The problem is the rents are also low. I'm having a very difficult time making anything pencil here. A 3-bedroom house costs $400K and rents for $2000/mo. which is why strategies like rent by the room start to look appealing.
I should also say I'm very conservative in my approach. I would never buy anything without multiple earning and exit strategies. In other words, if you can find a deal that works for a long-term rental (or a short-term rental), THEN consider renting by the room to juice your returns. If you try rent by the room and it doesn't work out, you can always fall back on your long-term rental strategy.
(There is a market for short-term rentals, btw...traveling nurses and doctors, contractors working at the UC...I'd look there before I looked at renting your house to UC students on a rent-by-the-room basis.)
One area, in Merced, that I AM bullish on - Downtown Merced. It is seeing a resurgence in activity. New restaurants, coffee shops, and bars have breathed life into our once sleepy (and somewhat scary) downtown. If you go downtown on any Thursday or Friday night, you'll find it bustling! The neighborhoods around the downtown have some very charming older homes with large lots (think: ADU potential). It's still considered a bit sketchy to some, and the numbers still don't quite work at today's rates and with today's building costs, but if I were going to place a bet (and I am) on real estate in Merced, that's where I'd focus...unless you have the money to buy up acres of land around the UC to develop.