All Forum Posts by: Mark N.A

tinqlam:

Are you referring to a home that you will use for a residence? Or a home that will be used for rental?

If this is for a residence, MikeOH stated you may use market sales comps to determine a value; you may also pay for an appraisal, or get a real estate agent's opinion.

If this is a rental, you may use the previously stated formula.

However, if you are wondering whether there is a 'standard' cap rate for single family home rentals, I don't know if there is any nationwide average, like one can find for apartment buildings.

(If anyone knows of such a resource for SFHs, please post it!)

For my potential rental homes, the cap rate I want will differ from property to property, depending upon such factors as management headaches, location, appreciation potential, anticipated maintenance costs, etc.

Then, to help keep me grounded, I compare that rate with what I can get from CDs, or a nice broad market mutual fund.

Plugging numbers into a formula is the easy part. The beauty, and danger, of real estate investment lies in the fact that it is as much 'art' as it is 'science'.

Jeff - there's a few ways you can approach this:

If you're short on time but long on cash you can go with a professional who will give you turn-key results.

The next step down is you can purchase a ready-made template and tweak it to your preferences.

I have three web sites and did them all through Yahoo. Yahoo hosts my sites for $11.95 a month each with 24/7 phone support, which I have never had to use.

Yahoo has free downloadable design software which was all I needed to design my sites. I have one site for my rentals, one site for buying houses, and one site for my writing business. I keep my sites relatively simple because, personally, I hate twirly, buzzy, flashy, noisy sites. Of course, you can always spend some long green on professional design software if that pulls your trigger.

What you might want to do first off is determine the purpose of your web presence. I use my sites to establish credibility, answer questions, screen out people, generate leads, and get folks to call me so I can try and close.

However, if your purpose is to sell a million widgets a month that's beyond my experience.

TheREIbrain.com has some useful info on website content.

Here are some more points to consider:

Your rental condo will be just like everyone else's so you will have stiff competition. College kids today are spoiled to the core and want the latest and greatest, from granite countertops to free internet to heated pools, etc. What puts you in front of the pack?

Unlike single family homes where you control everything, a condo will have some sort of master association which will call the tune. You may get assessed for a new renovation or upgrade which you don't want but must pay for. Oh, and if the association gets sued and the award is over their insurance limit - YOU get to pay a share of the rest! Check with your insurance agent about some appropriate coverage for that little-understood possibility.

Around here leases for condo and apartment rentals end two weeks prior to the new lease and anyone not renewing leaves. During this two week period owners go in and paint everything and pretty regularly replace the carpet, not to mention repair anything else. If you're not going to do the work good luck finding a crew! They're all booked up! And as has been said before, college kids can trash a rental in more ways than imaginable.

Now, if you are 'buying a dorm room' for your kid that can change the picture a little, depending upon your income and other circumstances. Check with your accountant.

As has been said here before: follow the numbers. Negative cash flow is NOT good (are you adding in the lost interest and opportunity cost on your down payment?).

But I will say a lot of good parents buy condos and put their kids into them. It will (hopefully) teach them some things. Also, you can pay them a management fee - and if you do pay them make them MAX OUT their IRA - they will thank you for it when they retire rich!

Good luck and let us know how it turns out.

Hey Arneyd --

Where I'm at in NC the city has an ordinance forbidding more than 3 unrelated persons living in the same house. They've gone after some college rental landlords with fines and forced the extra tenants to move out.

Do they have such an ordinance in Raleigh? And if so, how do LLs deal with it?

Oh, and for some strange reason... they've never enforced that ordinance on the 'other' side of town........ Wonder why? Duh!

HiccupinG --

Properties surrounding the campus here have gone down in value 15-25% or more in value. 'For Rent' signs abound where they have never been seen before, and prime rental houses and apartments sit vacant for months and months. I'm even seeing some foreclosures hitting recent college rental investors.

I like college rentals, don't get me wrong, but making the numbers work right now is hard here. Especially since my benchmark is a nice, low-maintenance S&P 500 fund that has historically returned an average of 12% yearly over the long term.

If you're in a better area jump in! Just be prepared to be a second 'daddy' to these kids!

MikeOH is exactly right when he compares renting to college students like renting to low income tenants. I rent to both kinds of tenants and the similarity is dead-on, if somewhat amusing, if somewhat sad too as these students will be our future 'leaders' and 'managers' or whatever.

Here's another serious point to take into consideration: litigious parents.

As someone wiser than me has already stated on another forum: "You get the justice you can afford."

I've got three houses within a block or two of the local university campus. I've rented them out for about 30 years.

First off, location is of paramount importance. As the school has expanded so have newly built apartments. All offer high speed internet, pools, movie rooms. tanning beds, exercise facilities, etc etc etc to entice people to move in.

I do not have to because I have location. i.e. sleep in, walk to campus, no bus rides or parking hassles, stumble home drunk from the bars, etc.

My leases are from August 1 to July 31, basically the school year. When one group moves out the next moves in and I rent "as is". Everything works, of course, but I don't go in and paint or do cosmetics. That's the power of location.

More often than not, the one month's rent security deposit covers all the damages. But when it doesn't, I generally eat that overage but it's not usually huge.

I have the parents sign and notarize a guarantee for rent and damages.

The one problem with vacancies I have had is if the kids bail in the middle of the school year. Since other landlords use a school year lease finding someone to move in can be next to impossible until the next cycle. But then that's the time I can go in and upgrade the unit.

Renting to college kids is as much a pain in the *** as any other rental; they're really not that bright. I've had 'em flush towels down the commode, blow their grant money on sports betting, and one time use the basement for a shooting range. The list goes on.

If you can make the numbers work that's great. Unfortunately in my area, many fools are rushing in, including parents, and paying top dollar for rental units hoping that appreciation will make them whole after years of negative cash flow. Maybe it will and maybe it won't but I'm not betting the farm on it.

Good luck.

>>My lease doesn't say anything about notice just that I may enter the premises during reasonable hours for the following purposes: to inspect to see if the tenant is complying with this agreement...<<

If this is what your lease specifically states, seems to me you have the right to enter 'during reasonable hours... to inspect to see if the tenant is complying with this agreement..."

Were I going to eviction court I'd present the lease clause as proof I had such a right to enter, and then point out that such a breach (bad smells and annoying barking) could affect the habitability of the premises as well as the rights of my other tenants, and so needed immediate attention.

From what I read, small claims courts differ greatly. It might pay you to sit in on several sessions to see how things work. Where I live the sessions seem pretty fair without too much bias toward either tenant or landlord. Just don't try any BS and come prepared with whatever documents you think you may need.

Of course, if I was losing sleep over this I'd hire an attorney and chalk up the fee as one more tuition payment. (And in my case I've sure paid my share of tuition!)

Best of luck!