All Forum Posts by: Kyle Soderman

@Steven S. Yes to managing myself at first. I would prefer not to do snow/ lawn care myself. I honestly was not entirely sure how much snow removal/ lawn care would cost. That is part of the reason why I posted a thread to see what others thought.

I still need to get prices from local companies to get an exact price.

@COURTNEY King Use the 50% rule of thumb! This rule of thumb can help you quickly analyze deals on the mls. Throw out the duds and further analyze the ones that work.

If you not sure what the 50% rule is then type "50% rule" in the search bar. There is a plethora of threads regarding that topic!

@David Kosiorek I definitely believe that to be true with the normal SFR market. As far as the student market I believe it is feasible. Like I said above, management companies have students decide whether they want to stay or leave 6 months or more in advance. This gives them half a year to market the property and find a new set of tenants.

If anyone knows of a BP member with experience in the student housing market, please tag them, I would love to hear their input.

That is a great point @Colleen F.! I actually have considered this and the reason I am interested in this property right now is because it is currently rented out. I am assuming up until May as this is the normal lease duration for this market.

@Michael Le Any student looking for a house off campus will be a Sophomore or upper clansman. That being said, most students after freshmen year will find part time jobs and stay for the summers. I do not believe it will be difficult finding a group of 4 students that want a full 12 month lease. Typically beginning in May at the end of spring semester.

BUT if that is not the case then most companies in there area will have an extra charge for a 10 month lease to help offset the vacancy over the summer.

In my eyes, a 16% Return on investment is an exceptional return... you may believe different though. I am going to invest in real estate because I have a passion for it, I love learning about REI. I want to make it my full time "job" and live off the cash flow.

Thanks for the responses guys. I am going to have to look more into that @Diana Ferreyra

Any other suggestions on the numbers?

 It is exceptionally easy to rent out college houses in the area I am, especially 3 blocks off campus. Many landlords in the area have had 100% occupancy in the same area. It is also the norm to lease the house around 6 months in advance.

I have been analyzing some deals in my area and have come across one that is of interest to me. This will be a college rental that is only 3 blocks off campus which is prime location for a college rental. 4 bed 1 bath SFR. Description: Updated Electrical. Spacious Kitchen. Cute Breakfast bar. Close to Campus. Onsite Parking. Convenient to Lake George, Gas Station, Food, and Bookstore. Large, Flat, Corner, Yard! 24 hour notice for showings. 

Here are the numbers:

Asking price: 89,900

Purchase price: 75,000 (this is the price that make the numbers work)

Operating costs:

Water: 75

Sewer: 25

Garbage: 25

Electric: 0

Insurance: 50

Lawn/ Snow: 50

Property tax: 1416.... 118/month

Vacancy: (3%) 38.40

Repairs: (7%) 89.60

Cap Ex: (10%) 128

Prop mgmt: (9%) 115.20  (I plan to self manage at first but later move to a PM)

Total operating expenses: 714.20/ Month

P&I: 286.45

Overall total expenses: 1,000.65/ Month

Total income: 320 per door= 1,280/ Month

Cashflow: 279.35/ Month   3,352.20/ Yr.

Closing cost: 2,000

Repair cost: 3,000 (have not walked the property yet, I am thinking it does not need much if any rehab)

Down payment: (20%) 15,000

Total cash needed: 20,000

COC ROI: 3,352.20/20,000= 16.76%

Sorry for the lengthy post. I would like to see what you all think of my numbers. Anything you notice may not be correct? Thanks!

Just remember the 50% rule is a rule of thumb! Once you view the property make sure to break down all the expenses one by one. Use the BP rental property calculator... it makes it very easy.