Not Panicking Yet
I just bought a totally renovated duplex near a college campus. The neighborhood is improving but still has a ways to go. When I did my analysis on the deal I assumed I could rent the units out for $1100-$1200 per month to college students. I made this assumption by talking to a couple of other landlords in the area and looking at comparable places. However, I knew that the non students around this area would not be able to afford this amount. Everyone is telling me that the students sign their leases from April-August and that around that time there isn't enough nice off campus housing to go around. My dilemma is what to do with the places until then. I have run ads in the paper, advertised on the colleges off campus housing website, and have a sign in the yard. The only response I have gotten are the people who call from the sign, they immediately hang up when I tell them the rent and that I run credit checks.
I am considering Sec. 8 but it will require me to commit to 1 year lease and they will only let me go to $980 in rent and I won't be able to get any college kids in them with the $1100-$1200 rents.
I am not panicking or discouraged but this experience has taught me a valuable lesson. Don't buy something on what you think the neighborhood will be in several years. The duplex I own is too nice and requires more rent to cashflow than the neighborhood can support. Maybe long term this deal will have been a wise one for me but it looks painfully obvious that getting it rented out at the amount I need is going to be more difficult than I expected.
Another suggestion for the in between periods...
If you have any big conventions or conferences in your area during the in between time, try renting it on a weekly (or similar) basis. Out here we have a gem show that occurs for 1 month. People from all over the world come out and people rent out their houses for 3-4x an average rental price for the month. Even homeowners who actually live in their homes go on vacation or stay with a relative for the month and make a nice profit. Any college seminars, executive seminars or conferences, interns, etc?
Totally agree with allhandl. I'm a recent grad and in school all the places I found to rent were in the college paper or on the college website. The lease was always for a longer period than the semester - which we would just sublet the place to summer students or even the next round of tenets.
Keep the lease for the full year, it's up to the renters to handle that - and make sure they understand that, as well as their responsibility regarding subletters.
Even now when you have the place, advertise as a short term rental - perfect for summer / winter sessions, short bike ride to campus, blah blah - all the good stuff college kids care about (i.e. walking distance to bar, safe neighborhood, parking, etc.).
Cheers :-D
If you get $980 for 12 months = $11,760
If you get $1200 for 10 month = $12,000
Either way...its the same...I'd say better to get a longer term tenant in there. The house is not vacant, so less likely for something wrong to go unnoticed (water pipes...) and they pay utilities all 12 months, not them 10 mo and you 2 months.
I's rathjer rent to longer term tenant anyway, less turnover.
Just my 2 cents