College Bording House Worth The Risk?
I'm looking at purchasing a bording house in a local college town. The house has 5 bedrooms and every year it is rented out to 10 students (2 per room). Each student pays $6000/yr to live there. The asking price is $225K and needs some work.
That asside I'm curious if anyone has any history with theis type of property. It would seem to me that it could be a risky venture depending on who you had living there. But it also seems like a pretty good deal.
Any suggestions or feedback about this is greatly appreciated.
Thank you!
Yep, take it from a person who lived in college rentals, you need to screen very well. The I'm not a real estate expert (Yet!) but I lived in one apartment that ( I am ashamed to say) we caused $4000 above the security deposit in damage due to drunken shinaigans. I paid up my share but I know my long ago former roommatenever paid his. So, as long as you don't rent to somebody like me you are fine...
I would buy this in a minute. at 60K per year you would get your money back in less than 4 years.
ry,
and line up a good handyman. You will be tapping into their security deposit each year for silly cosmetic stuff but its worth it
I do college rentals here in delaware and I have to tell you it's better than the SFHs i have outside campus. Yes college students are harder on the property than others but that is the reason for the large profits.
What I do is sign the parents on the lease as well. So if I ever see a sticky situation occur that I dont want to sweep under the mat, I remind them that the parents are just as liable. In my case the parents are almost always out of town and for them to take off work and fly in for their kids silly case is rediculous.
I have never once had a problem with it. My advice is to get that property before I do
Making sure the parents are on the lease is a great idea.
Just one example of the kind of crap you might see renting to college kids: I had a friend who had set up a target at the far end of the hall in his apartment- and all of us would practice our archery on it. One guy had a crossbow - that thing put a hole in the wall as big as a man's fist!
So, yeah, don't rent to people like my friend.
hahahha
ladygrey, oh the stories i have from when I was in college myself. In all actuality you have to plan for the worse. I typically run my leases from june to june. So all summer the house is pretty much vacant. In January while tenants are there I have my leases signed for the following year so there is never any downtime. I always give myself a week or so between and as things get closer I line up students to clean and paint the pace.
As for the target shots in the wall and pasta on the kitchen ceiing, I usually leave those kind of fixes to my maintenance pro. hahah
Having the parents on the lease is a great idea but how exactly do you do that if they're out of state, would you have to fax/mail it to them or would they have to sign in person?
Hey Bob;
Sorry so long to get back to you. In some situations I just have them fax or mail a signed copy of the lease to me. Since I typically have the lease signed some 4 months prior to move-in I sometimes just have the tenants deliver it to me and I follow up with a phone call. Of course there are going to be instances where they college students forge the names however if and/or when the times comes that I have to take them to court, ill let the judge decide that. They are gonna get subpeoned <sp> anyway!
More often than not I actually get to meet the parents prior to move in because they want to see what kind of housing their prescious angels <yeah right> are moving into.
I only wish all rentals could be this easy
allhandi : do you seem to have to take the kids to court alot? Does the case go to small claims court and how much does this usually cost lawyer fees
machuse,
pretty much what i am trying to stress is [ ive never had to take any of them to court ] . Its really nice.
I did however have a freind who's house was complety trashed which exceeded security deposits. He went after the college students on an individual basis and 3 out 4 paid (or parents did) when parents were notified. The 4th person was local and the parents did show up for work only to lose.
in the years I have owned these properties and the years my friend has owned his, we (combined) seen over 100 tenants come and go. Only that one incident has gone to court out of 100.
So from a collections standpoint I dont think there is a better tenant. From a maintenance standpoint... oh brother!