All Forum Posts by: Ray Pantle
Ray Pantle has started 2 posts and replied 5 times.
Post: Rent by Room Student Rental ($$$ and Class Determinations)
- Posts 5
- Votes 6
I'm considering buying SFHs near universities and renting by the room to students. A promising property popped up in one of my target locations, and I need more info before crunching the numbers.
1) I found a few comps on rent.com (similar in # of rooms, square footage, advertised as student housing), but the listings for the comps have the entire properties included as one unit to rent, rather than offering a lease by room option. So how would I calculate a reasonable rent price per room?
For instance, the 6-bedroom rental literally next door to the property I'm interested in buying is listed at $1,800 per month. My understanding is that the benefit of student rental by the room is that you can get more per room (in this case, 6 rooms) than if you rented the entire unit under one lease; in other words, something greater than $300 per room ($1,800 divided by 6). But how do I arrive at that number with no rent-by-room comps?
2) I understand the percentages to consider for vacancy rate, maintenance, eviction costs, and other expenses should be based on the property class, but I'm not sure how to decide the class in this situation, where I'm targeting students (generally 18-24 year olds). It seems like the usual criteria for deciding class wouldn't apply. Can someone help me out?
Thanks in advance!
Hi @Marc Winter--I came across this post from quite a few years ago. Is this still true about Scranton that it's a buy/hold/cash-flow-friendly market? I was born/raised in Scranton, now living OOS, but my family is still there and I visit at least once a year.
Quote from @Marc Winter:
@Chris K. is correct--property values and rentals are a bit higher in Scranton than in Wilkes-Barre. As property managers we get calls every day from OOS investors. Prices are VERY low compared to the major city areas, but more importantaly, the ROI is much higher on cash flow (see my blog post). But Scranton and surrounding towns are not an 'appreciation play'. This is, IMHO a buy/hold/cashflow play.
Chris K: Scranton sold the only performing asset they had--the Sewer Authority-- to PAWC. Now the sewer is tied directly into the water bill. So, it is no longer a lienable charge. As long as the tenant has their own water meter, they will pay for sewer.
The other change coming is a class-action suit being brought against Scranton, thanks in large part to @Adam Guiffrida. Logic: in PA, no municipality may profit from a service and/or put that money into the general account. The suit is aimed at reducing waste/trash removal to what it actually costs the city. Currently the charge is way over the city's cost.
With U of Scranton, Penn State Worthington, Marywood U, Johnson College and Lackawanna CC in our immediate area, it is a major student draw. With two major hospitals, health related services sector is bringing lots of career-level jobs/investment. Example: Geisinger CMC just finished a $100M addition and bought the new Medical College--what a pipeline move!
Property taxes can be a bit sketchy in the sense that they often make no sense. But one may always appeal. The local transfer tax is DOUBLE. Most of the rest of PA is 2%, Scranton is at 4%.
Sense of humor? Scranton really doesn't have one. What I mean to say is that if you want to sneeze inside the city limits, remember to pull a permit. And remember, only contractors that are licensed in the city of Scranton can be hired. Licensed in Philly or Harrisburg? Nope--gotta get a Scranton GC license.
I'm not badmouthing the city--learn the ropes and rules, and it becomes workable. What I'm getting to is, it looks like a sleepy lil hamlet of about 65 thousand folks, but, DON'T try sneakin round the back door. When you get caught, it'll cost you. Example: you MUST have a local representative (registered with the city) if you, the owner, live over 25 miles away from the city. The rep can be a friend, relative, handyman, broker or property manager, but it is reqired.
So, hope this helps shed a little light my insights into property management in Scranton and surrounding towns. Feel free to pm me with other/specific questions.
Post: Cash Flow Dead?/Financing Options/General Advice
- Posts 5
- Votes 6
Hello,
I'm a newbie looking to purchase my first rental property and in need of some advice.
My main goal venturing into REI is to gain some cash flow so I can scale down (not quit) my day job, which seemed fairly attainable based on the deals analysis on this site and discussions on the BP podcast, but recently I've seen several forum posts stating it's no longer possible to have cash flow, that you'll be lucky to break even. Is that true? Or does it just take more careful planning and knowledge in today's world?
I've heard high interest rates are one thing hampering cash flow, but my plan was to tap into the equity from our home to cover the first rental, understanding that we could get a better interest rate on a HELOC than with a traditional loan, and therefore create more cash flow. Is that correct? Or does it all depend on the LTV ratio on the HELOC as to how low the interest rate will be?
The other option is to withdraw money from our Roth IRAs to pay in cash, which would give us a decent cash flow on the first property, but we would still need to finance the second, third, fourth, etc. property either through a HELOC or traditional loan, and would then face the same question of whether we can find a deal that will give us some (as in $200-300) cash flow.
So I'd like to figure out if cash flow is still an option, and if so, what's the best strategy if that's my goal.
Post: New Investor Advice for Websites to Help Analyze Properties
- Posts 5
- Votes 6
Hi@Keith Gephart. I'm a newbie also from Ohio looking to buy my first rental using home equity. How did you go about getting the HELOC? Was it just a matter of reaching out to local credit unions and banks to find the best deal?