All Forum Posts by: Adam Petterson

@Marty Gold being a recent college graduate, most students are looking to get as close to the college as they can. Remember that many students may not have a car, but still want the ability to live off campus. College rentals are a great opportunity if you buy at the right price. In my area I believe that the sweet spot is 3-4 rooms with 2 bathrooms. The second bathroom is a huge feature to have and many students (or their parents) will pay a nice premium to have two showers. As Brandon said above, the bigger the house, the higher the potential for roommate issues and drama. 

The main drawbacks I have with college rentals is the amount of wear and tear that the students put the house through, and the fact that they may only occupy the house for a year. If you are paying a property management company to place a new tenant every year it can get expensive.

If you have any questions feel free to respond or send me a personal message. While in school, I rented 2 different properties in a college area, and currently am debating purchasing a rental property in a student area as well.

@Brendan L. 

@Steve Vaughan has a great point here... make sure to hire a quality inspector. Things can get expensive really quick when you have to replace wiring and plumbing. When making an offer make it continent upon inspection. That way, if the inspection uncovers potential issues you can re open negotiations. With older houses there may be galvanized plumbing or out of date electrical wiring. 

Uncovering these potential problems before you buy and you can save you thousands. It may also give you leverage to re negotiate the purchase price with the seller.

@Jonathan Kramer it will depend on how you plan to finance the deal. If you are planing on getting a conventional mortgage there will be a 4-6 week process. If you are content with the results of your inspection, and don't want to re-negotiate, send the executed purchase agreement to both your title company and lender for them to start their work. Your lender will work on the correct disclosure information and will request any more documentation they may need. They will then request an appraisal and coordinate the closing with your title company. Remember, the lender and title company are part of your "purchasing team" and will help you set up your closing and will answer any questions you may have. They are only paid if you complete the transaction, and therefore are usually willing to help with questions and want to make sure everything stays on track.

If you plan on using a "commercial" loan product, or a loan that the bank will keep on its own books, then the process will vary by lender. With the financial institution I worked for we were able to coordinate an approval, appraisal, title work, and closing in approximately 3 weeks (sometimes even shorter for repeat customers).

As @Donna Salmiery says above, make sure you have contingencies in your offer in case you have an issue acquiring financing, appraisal , etc. This way you are able to re-negotiate or walk away from a deal without losing your earnest money if there is an issue with financing, appraisal, inspection, etc.

Best of luck

@Brendan L. This will depend on your individual situation and the numbers you've run. I agree with @Jeremy Jackson that if you are not handy and don't have any connections yet that you may want to find something close to turn key, but if your numbers work with a vacancy, cap ex, management fees, etc there is nothing wrong with capitalizing off of someone else's work. 

However, if you are able to buy a property that is a "fixer upper" you have a higher risk/reward opportunity. If you are looking to buy a property to fix up, I would recommend working with an agent/broker that specializes in investment properties. Many agents/brokers that specialize in the investment capacity own or manage properties themselves and may be able to introduce you to the correct contractors.

I personally was able to purchase a property that was renovated right before I moved in, but had room to expand by finishing the attic. I got the best of both worlds, newly refinished property with the ability to add instant equity.

Best of luck

Bigger Pockets Community,

I am new to bigger pockets and wanted to ask for some help with a decision that I have been battling over the past few months. To give you a little background on myself, I have worked in commercial real estate as both an analyst and a lender for deals ranging from a single family investment properties to a 20+ unit apartment complex. However, being in my early twenties, I am new to personally investing in real estate and just recently obtained my real estate license. I currently own one single family property that I purchased in July of 2016 for $220,000. With the property values steadily increasing and after putting in about $20,000 in rehab to the property, market value for the property is around $275,000. I am trying to decide whether to refinance the property and get cash out, or to sell the property and move on to my next property.

Details on Property:

- 4 bedroom + large den (not legally qualified as bedroom but by far biggest room in house), 2 bathrooms, and 2,100 square feet

Loan Details:

- Currently on a 20 year Fixed at 3.375%, Loan balance is approximately $171,000

Refinancing:

I am thinking about refinancing the property in order to cash out almost $50,000 and stretch my loan amortization to 30 years. With todays current rates, I would be able to get the cash and stretch the amortization while still keep my monthly payment almost the exact same. Cash flow on the house would be good for rental purposes. I live in St. Paul within 1 mile of 5 college campuses and would be able to rent the property for around $2,200 per month with a mortgage payment of $1,300

Selling:

I frequently am looking at listings and open houses in my neighborhood and see the homes around me selling at inflated prices. Multiple properties have sold for $250k-$275k that are in need of some TLC in the immediate area. If I sold at $275,000 I would be able to clear approximately $90,000 (that is counting the money I have already sunk in to the property). With that cash I would be able to purchase another property in the area in order to try to renovate and add value.

Any thoughts? I appreciate all the help and advice you can offer.

Thanks,

Adam