All Forum Posts by: David London

Recently came across two articles in the local newspaper of one of my focus markets about 2 separate student housing portfolio sales...the first in 2018 of 70 houses which sold for 30M and another one this year of 45 houses sold for 21M...the houses in both sales are all 4-5 BR SFH walking distance to campus...and majority 100 years old or more. That make average house for 1st sale 420K and second sale 475K.

I follow this market very closely...got 1 house and now in contract for another...median house prices near the university is about 150K.

So I am quite puzzled what is the rational behind buying these portfolios for 3 times the value of the houses themselves...there is obviously an advantage to buying an established portfolio with built in economies of scale...and I assume a company who is capable of getting this kind of portfolio know what they do...but 3 times more?

Please explain.

@Aymeric De Conde Where in NYC are you looking in?

If you are not planning to live in NYC for a long time then I think you better off investing in an area with a better cash flow...If you have in mind your next destination after NYC then you should probably research that area...NYC is like investing in bonds...very safe...but very low if any returns...Managing an apartment in the city can be quite difficult. I have 2 rental coops which I purchased after the crash...and recently purchased a house in PA...for turning over a 380sf 1BR in NYC I got a quote for $1700 (grout and paint)...while in PA I got $4800 for a 2000 sf 5BR house...In NYC with that money you are a little fish and it is even hard to find contractors to come give you a quote...in general knowing what I know now I would go to PA, Upstate or the Midwest if I could do it again.

Another factor...as mentioned by other is that with this money you are mostly limited to coops...It is quite hard to find those which allow subletting and for many of those it is even harder to get financing.

Management is another issue that have to be considered as all co-ops (and many condos) will demand to approve your tenants causing unnecessary delays whenever there is a turnover.   

On the flip side...appreciation is great and vacancy is as low as it gets.

In your position I'll focus on one or two other markets and compare them to the deals you find in NYC.

@Michinori Kaneko I got annoyed as well when I saw in the contract my management pocket late fee to themselves...but over all they seemed professional...are good with communication and their base fee were much more competitive then other PM in the area...I would be much more concerned about the inability to cancel contract quickly (mine is 30 days which sound reasonable)...I would start looking for another PM and in your case since you have multiple properties...would start moving them one by one as they go out of contract...informing the PM company in a letter very professionally for the clauses in their contract which make you move your business elsewhere...if they figure you represent a growing portfolio maybe they'll reconsider.

One of my most important criteria when I chose my target market was that it will be large enough metro to allow PM variety. IMO the PM is the one professional who influence the investment success the most...with all the others you interact for very short amount of time. 

And for all those who suggest one should self manage...it's nice to have the option...but if you live in NYC you have to cross at least 1 state line if not more to get decent cash flow.

@Josh Magnus I would suggest to proceed with caution...but proceed nonetheless...In the area where I focus most of my attention, 80% of the houses for sale are places that were sold last time in 2006-2007...Most of them investors who finally manage to match the price they paid for...As most commentators said condition now are very different then 2008...but that doesn't mean crisis have to come from the same direction/cause to get the whole economy crashing along...Brexit...trade wars...student/consumer/corporate debt...there can be many reason for the next fall...and in 2008 nine out of ten economists didn't see it coming...that will probably be the only constant.

As someone who also work full time my suggestion is to narrow your focus on a specific area like 1 zip code and follow it to exhaustion...know every house that get to market...walk the street with google view over lunch break...analyze city/county records for every property that hit the market...check all rentals you can find...establish working relationship with one or two buyer agents...this way when something arrive to market you'll be in a position to act fast enough...I got one house that way and now in contract for another...both were sold last in 2007 and on both I offered asking price (=2007) the day after they got to market...if the numbers work for cash flow then the state of the economy is much less important...and be picky (don't feel bad passing on houses)...personally my goal is to be able to become at least part-time when the crash will come so I have more time for RE then...good luck!

@Bryan Mills

Thanks. Not what I wanted to hear but what I suspected to be the case...the repairs in this case definitely don't equal the purchase price...and I do max out the funds which will qualify for capital gains so the repairs will have to come from post-tax savings.

From the little I researched it does look like an incentive geared more towards larger investors and I suspect will squeeze the opportunity out of these zones for the little players...I'm not even sure what make that census tract qualify since the market seem super hot as is...houses are back at 2007 prices yet get offers in less then a week.

Hi,

Just made an offer on a house located in an opportunity zone and trying to figures the particulars of how it works.

From my research I have some understanding of the big picture of the zones but am quite confused about the details.

The deal from what I see so far possibly qualify:

1. Located in an approved zone.

2. House is in need of some renovation (although condition is livable overall...and currently rented).

3. We are planning to sell stocks to buy the house.

My first question are:

1. Which properties in a zone are eligible properties?

2. How do one go about setting a Qualified Opportunity Fund? Do I need to buy the house as an LLC? I am planning to partially BRRR out after renovation and thus will probably be much easier if bought privately.

3. What is the timeline of the process? Do I need to do all before closing or can it be handled later?

Appreciate any links to resources that explain how individuals can take advantage of the opportunity zones...from my reading so far it seem to be more geared towards the larger investors then individuals.

I think more details are needed for an informed response but if the current tenant is a keeper and the new one pass your rental criteria then I would personally go for it...If possible I would just cancel (mutually) the original lease and then sign a new lease with both tenants on it...if it reduce their income to rent ratio that benefit you as well as they will be more likely to manage rent and might stay longer.

Thank all for the replies,

@Tim S. the 1000 students post is great...definitely worth to get back to it again and again if one think on the student housing path...I also prefer the whole house approach which also seem to be the norm in the university town where the house is located...this year though it seem I'm trying room by room since it doesn't seem to generate enough interest and time is running out...vacancy can become 100% with students if I miss the academic year! 

Any thoughts on the Co-ed vs. single sex? if go room by room? Let's say my 2 first eligible applicants are females and then I have a guy...can/should I deny him...is it my business?...I went to university in Italy where all this issues are much more laidback and most apartments were co-ed.

Hi, 

Getting my first student housing ready for next academic year and wanted to hear the experience of other who rent to students.

Main question is renting By Room vs. Whole House...my place is 5BR/3BA of which 2 of the bathroom are private...so it potentially work well both ways.

I prefer renting for a group since in my mind it minimize the potential for drama plus other pros...that said almost all of the inquiries I got so far were from people looking only for themselves.

How about going Co-ed while renting By Room?

Thanks,

Any particular reason why Oberlin? I tend to agree with Benjamin above about small colleges not being safe investments...Many colleges now figured out student housing can be good cash flow for them and start to expend their housing...with a small college that might mean the end of a market...if you want to stick to Ohio then look to Ohio State with it's 60K students in Colombus or Ohio University in Athens with 30K...I am looking in a 8K college town and the market feel tight.

@Benjamin Piecenski Any insights on mentioned universities above? I'm currently focused on Pennsylvania but would like to expand west when I'll have more time.