All Forum Posts by: Alexander V.

@Jacqueline Nguyen,

You've gotten replies from people who know more about the details of loans than I do. However, I'll tell you this. Remember that loan officers get paid commission. There are such things as actual lending requirements stipulated by government agencies that dictate the rules of the programs, and then there are "overlays" which are basically extended guidelines that the lender has voluntarily chosen to fit their own business model.

Loan officers that work for lenders that have certain restrictive overlays will often imply or outright state (falsely) that their overlays are program requirements. If you believe that no other lender can give you a better deal, you'll stay with the current lender that you're talking to and they'll get their commission. Following this logic, loan officers will often say things like "we can't do it and everyone else will say the same" or "that's impossible, nobody is doing that anymore." Unless you have the actual government memorandum/pamphlet/law explicitly saying that nobody can do it, you should not take the loan officers at their word. If you call 4 loan officers from 4 different companies, it is not uncommon for them all to claim slightly different things are "possible."

This doesn't mean that they're always correct or incorrect. Right now a lot of programs have been temporarily modified due to the pandemic, and I've had loan officers who were honestly unaware of certain memorandums. As such, they tried to offer something that I knew that they couldn't actually follow through with. My point in saying all of this is that while you should confirm and ask questions, you should also understand that it is totally normal for different loan officers to tell you different things, and they will often claim that something is "impossible" when it is completely possible.

If you think that you can consistently make 30% IRR in syndication deals, then by all means go for it. But this whole thread sounds very bizarre to me. You also seem to have based your view of syndications on a sample size of 2 good outliers and based your disdain for direct ownership on a sample size of 2 bad outliers, and when someone brought that up, you basically said that you don't mind losing money as long as you spent no time losing it.

The type of person that can lose 50k and be mad "for two days" and thinks that productivity has been lost if he spends a few little hours looking over a deal that could ultimately make more money than many people make in a year is a person that most cannot relate to. There's nothing wrong with wanting an easy return on your hard earned money, but it really seems like you have a mentality and background that typically leads people to blue chips or angel investing rather than real estate. Out of curiosity, what drew you to real estate in the first place when you dislike active investments so much?

Best of luck to you whatever you choose to do. I agree that a bunch of strangers wouldn't want to share a bathroom, but that's precisely what happens in college dormitories anyway. Virtually none of them have private bathrooms, they're typically shared between 4-12 strangers. I just don't see a single college student renting four bedrooms when they can only use one bed at a time, and the volume of groups of friends looking to rent an entire house is going to be far lower than the volume of individuals looking to rent a room. Plus, the type who rent the entire house are also far more likely to throw house parties in "their" big house.

Let us know whatever you decide to do.

@Cliff H., I'm not currently leasing on a per bedroom basis, I'm just brainstorming options to help the OP. I would certainly try it though if I had properties very near a university.

I think your concerns are partially justified, but it can still ultimately pay to lease by the bedroom. Here's the reason why. Typically, when you have smaller and cheaper units, your return is higher but your risk is also higher due to the type of tenant that it attracts. College students can go for smaller cheaper spaces, but they are more reliable than others that such an arrangement may appeal to. Their financial state and willingness to accept a such a space is purely due to their age. Yes, you'll have more leases to deal with, but if you're leasing for the entire school year (or just the entire year), it ultimately isn't that much more work while the payoff may be substantial as compared to renting on a per unit basis. 

Moreover, college students are typically able to get a parent to co-sign. If they try to break the lease, handle it like any other person trying to break the lease--although I don't think that college students are quite as rowdy and fickle as some make them out to be. Plus you can use special screening practices for college students. They often don't have credit scores or a prior landlord for reference, but their parents' income will say something about their background, as will their high school GPA and what they want to major in. The straight A physics student from Princeton is not going to be throwing house parties, and if he does, his parents will be able to pay for the damages.

Those are just my thoughts. I've known several people who have done this with great success, so I personally wouldn't feel nervous about trying it if I had a property for which it would fit. Based on the limited information I have, OP's property and circumstance may be a good fit.

@Kelsey Folger, I can guarantee you that no university is going to be able to tell you when classes will resume normally at this point in time. Moreover, I think what @Cliff H. says is worth bearing in mind, that college rental demand is typically highest through September and drops precipitously in October.

Again, I don't know the specifics of your location, but you said that this property has a 4/1 unit and a 3/1 unit. That seems extremely large for a college student. Small groups of friends who go to the same university may occasionally rent a 4 bedroom unit and be roommates, but that's still a roommate situation and requires them to know each other in advance. If I were in your position, I would put the bedrooms up for rent. This will do 2 things. 

First, it will allow students with a lower budget who lack a pre-existing group they want to room with to still afford renting from you. This could significantly increase your pool of prospective tenants. Second, it breaks your units down into smaller pieces, so you're no longer in an all-or-nothing situation. Even if you only end up leasing 2 bedrooms in each unit this semester, that's much better than nothing, and you can bounce back later when the pandemic wanes. 

If you're in a great location very close to the school, you can even sometimes make more by leasing rooms instead of units. Just this week I heard of an investor in Tampa with a quadruplex near the university. All four units are 2/1, and he rents out each of the 8 rooms for $600/month... He's grossing $4800 per month on a property that he bought for 250k.

I don't know anything about your area, but that strikes me as a very large difference between what the average renter could afford and what the college students are expected to pay. College students are often nearly broke themselves, aren't they?

What is the configuration of the duplex? Are the units 1/1 or 2/1?

Interested to hear responses on this. I can tell you that local apartment complexes near me (which is near a large university) have slightly lowered their prices and begun offering "specials" such as "first month 75% off when you sign a 12 month lease" or "security deposit waived this month only." It shows that they're under a bit of strain, but at the same time, they don't have high vacancies right now. 

Have you looked around your area and checked vacancies now? If some bigger established locations haven't dropped their price much and aren't suffering from higher than normal vacancies, then the virus may not be your problem.

Also, you specifically say college renters. Are you trying to rent by the bedroom? Have you tried renting by unit instead?

You're speaking logically like someone who plans things and follows the plan. This woman has 8 kids running around (and crawling?) yet she sprayed so much Raid (neurotoxin) that the floors (over which her babies are crawling?) and walls of your home were sticky.

Do you really think based on what you've seen thus far that she has the cognitive skills and self-discipline to make and honor a course of action that you present to her? You should definitely do whatever is best financially for yourself, but remember who you're dealing with here. Your last sentence also indicates that you may still feel bad for this person. Giving a drug addict $100 every time they come to you "one last time" so that they can pay for a "hotel room" is enabling. You already said that her caseworker knew that she had "destroyed" her previous landlord's home and nevertheless passed her off on you. 

Helping her to retain a voucher and find another dupe will not help the dupe, or her, or her kids as they crawl through the next dose of toxic sludge on the floor.

 ...What?

Evict them as soon as possible. They never should have been in your house to begin with, your posts indicate that you're well aware of this. The "creme de la creme of Section-8 tenants" that Joe Asamoah talks about are an elusive (or illusive) 0.01%, and the other 99.9% are in their positions due to years or decades of incessant bad decision-making. People with decades of consistently bad decisions do not suddenly change when someone gives them yet another chance. Taking in people who have made of mess of their lives and letting them make a mess of your house doesn't help anyone.

Sounds like you've got a worse infestation than just cockroaches. I hope the damage isn't as bad as you anticipate.