Investing In A College Town
Hello,
I would like to begin by thanking all the members of the TCI community for their excellent posts througout the forum.
I have been a member for some time and have never been disapointed by the caliber of professionals who are registered here.
I currently live in a medium size college town that revolves around the fluctuating student population. Because of this there is a large supply of apartments, and other rental properties.
At this time the rental market is fairly soft, meaning that there are lots of choices for rentals and not an overwhelming demand.
There is however a large demand for single family houses. So much so that each property for sale received on average 8-10 bids.
Because of this city's demographics the house buying market is very competitive. This mainly due to the fact that house prices rose 16% last year.
There is sharp increase in price for property's close to the University (out of my price range, which is currently up to 90,000).
I need help figuring out what aspect of real estate investing would be best for me to start in.
Thank you for taking the time to read this post. I look forward to reading your replies and advice.
Thank you,
Peter Ferrigan
One other thing of which to be aware is the difficulty in obtaining insurance for "student housing". Make sure you figure this into any pro forma you do when evaluating cash flow, etc...
Have you looked for any 'run down rental single family' that you could pick up at a good price and rehab/freshen up to sell? Find a retiree/investor who wants to carry the mortgages but wants out of the sagging rental market? Just a thought.
Thank you for your reply norrist! What insurance is regularly required when having renters? Also, I have considered purhasing a home then using a lease option to find a reliable tenant. What are you thoughts on this?
-Peter
Quote:
On 2004-11-05 19:06, norrist wrote:
One other thing of which to be aware is the difficulty in obtaining insurance for "student housing". Make sure you figure this into any pro forma you do when evaluating cash flow, etc...
Thank you ceinvests!
The first step in your plan is to find single family homes used as rentals. Then to talk the owners about selling. When you say 'carry the mortgage' are you referring to using 'subject to'?
After the rehab, then are you suggesting that I sell it outright and not bother with renting? What are your thoughts about lease-options in this situation?
-Peter
Quote:
On 2004-11-05 19:16, ceinvests wrote:
Have you looked for any 'run down rental single family' that you could pick up at a good price and rehab/freshen up to sell? Find a retiree/investor who wants to carry the mortgages but wants out of the sagging rental market? Just a thought.
First, let me clarify what I thought you were noting about your area:
That the rentals have a lower demand than the sales now. With that in mind, I thought 'Ahh, a retiree or out of state or investor might want to unload their rental SFH in that area. Many college rentals need some TLC, so you would try to get a good price. You freshen it up or rehab, and you place it for sale (or lease option).
I believe a Subject2 is paying per somebody else's loan. An owner financed is when the owner becomes your lender. It can be good income for someone who owns the place free and clear. They carry the loan.
~~ I am a landlord, so I believe in rentals! But it sounded like your market was not needing more rentals. Did I misunderstand you? Were you really saying that the SFH are renting fast?
You'll need a non-owner occupied "landlord" policy. As for the L/O, I personally find them attractive, depending on the "tenant". Best regards,
Tim
Thank you ce,
You did not misunderstand me about the SFH rental market. I need to do more research on how fast these are renting.
If I follow you correctly you are suggesting that I target out of state and elder home owners who currently own rental SFHs. This is a great idea!
I beleive my strongest selling points would be as follows:
1) Allows owners to stop having to be a landlord (which can be especially tough for college tenants)
2) Allows them to still collect an income through my payments on the home.
Do you have any other ideas?
Thank you again,
Peter Ferrigan
Quote:
On 2004-11-05 19:56, ceinvests wrote:
First, let me clarify what I thought you were noting about your area:
That the rentals have a lower demand than the sales now. With that in mind, I thought 'Ahh, a retiree or out of state or investor might want to unload their rental SFH in that area. Many college rentals need some TLC, so you would try to get a good price. You freshen it up or rehab, and you place it for sale (or lease option).
I believe a Subject2 is paying per somebody else's loan. An owner financed is when the owner becomes your lender. It can be good income for someone who owns the place free and clear. They carry the loan.
~~ I am a landlord, so I believe in rentals! But it sounded like your market was not needing more rentals. Did I misunderstand you? Were you really saying that the SFH are renting fast?
Tim,
Have you had any experience with L/O? If you dont mind sharing I would be very interested in hearing about it.
-Peter
Quote:
On 2004-11-05 20:36, norrist wrote:
You'll need a non-owner occupied "landlord" policy. As for the L/O, I personally find them attractive, depending on the "tenant". Best regards,
Tim
We like the L/O because, at least in theory, you get a tenant that exhibits a "pride of ownership". They tend to pay rent on time and take care of (and even improve) the property. Worst case, if they walk, you still own the property for another opportunity for a L/O. My partner, who doesn't contribute on TCI, is much more qualified to discuss them than I, however...
The Trust can offer anonymity, and in the process affords at least some protection from prying eyes identifying you as the owner. The LLC affords you some personal laibility protection, All of the assets held by the LLC however, are not protected.
Some recommend separate LLC's to hold each property, or only holding a couple properties in each LLC.
Dumdido, William Bronchick has some good articles on using land trusts. A land trust is only a few pieces of paper conisting of a land trust agreement. You deed your property into a land trust where the trustee is public information and the beneficiary is not recorded. This shows that if someone was to search public records for what assets you own, they would not see your name on the deed, however, mortgages can still be searched...
If you are in Florida, Mark Warda wrote a good book on land trusts in Fl.
GL
Hi Dumdido,
This is far from a legal opinion, but trusts, LLCs, Corporations, etc... are not replacements for "proper" liability coverage. In addition to other benefits they provide, I look upon them as additional "buffers" to protect you personally. In other words, they make it tougher for your personal assets to be attacked. I am sure some of the Attorneys at TCI could give you better thoughts on this, though.
Best regards,
Tim[ Edited by norrist on Date 11/06/2004 ]
Hi,
Go to the Law and Legal forum and read up - all of this is discussed a lot there.