2nd house, for Univ. kids/students

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Mrxyz
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2nd house, for Univ. kids/students

Post by Mrxyz »

Hi
I am planning to buy a small house for 4 Univ. students for the next 3 years or so. I want to run some numbers by you and want some recommendations and suggestions;

200k house, I plan to buy it cash. The property tax is around 2k/year. The 4 kids are to pay $400/month plus utilities which will be around $50 per month. So 400 x 4 kids x 12 x 3 years = $57600. I plan to sell the house after 3 years without any profit, at same price. I figure maintenance will be around $5000 per year.

What did I miss in the numbers?
Do I ask the kids to sign any renter's agreement? How do I get such an agreement? - No I have never been an landlord like this before.
Do I get monthly payments from the kids or have every 3 monthly for 'safety'?
Do I pay taxes on this 'income'?
Anything else to think about?

Thanks
TheLaughingCow
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Re: 2nd house, for Univ. kids/students

Post by TheLaughingCow »

Don't do it OP
JBTX
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Re: 2nd house, for Univ. kids/students

Post by JBTX »

- selling costs, could be about 10% of selling price, which would include realtor sales.costs
- for a $200k house, chances are in the 4 years it will need some major repair not covered by your $5k routine maintenance.
- how to you plan to guarantee 100% occupancy and 100% payment for 4 kids, including summer months when they may not go to school?
- how do you deal with issues when 4 kids just can't get along with each other?
- 4 kids over 4 years in a small house are likely to cause damage that would exceed your $5000 routine maintenance.
- so are you going to be the one personally responsible for fixing the toilet at 1 am when they flush God knows what down it? Or are you hiring somebody to deal with such issues

I'd say realistically you are looking at around 5% annual ROI, not including personal time invested. Doesn't seem worth it to me.
Starfish
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Re: 2nd house, for Univ. kids/students

Post by Starfish »

What did I miss in the numbers?
Cost of cleaning the puke from the carpet and the smashed tomatoes jars from the walls.
In a dorm I lived in people upstairs threw the tv AND the sink through the window. Lots of fun but I would not want to own and student inhabited place.
IowaFarmBoy
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Re: 2nd house, for Univ. kids/students

Post by IowaFarmBoy »

When I saw the title of the thread, I thought you were buying a house for your own children, but it appears you are just looking at this as an investment. Why are you limiting yourself to three years? The transactions costs of buying and reselling are large and recouping this over three years will be hard.

You definitely need a lease. We live in a college town and most of the leases are written for 12 months so the students are on the hook for the summer, whether they live there, find a sub-leaser, or aren't there. This avoids otherwise inevitable summer vacancies. Another thing that is interesting is that most of the leasing happens in October for the following term of August through July (so they are leasing now for Aug 2021). This might be different in other markets.

Students are tough tenants. It sounds like you don't have any experience as a landlord. It might be good to cut your teeth on something simpler. Student rentals can be a good business but I think it would be a challenge to manage.
Rudedog
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Re: 2nd house, for Univ. kids/students

Post by Rudedog »

I'd buy a house like this for my kids to live in. I would never buy and rent one for students that were not related to me. The cleaning/maintenance/insurance would be a nightmare.
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Nate79
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Re: 2nd house, for Univ. kids/students

Post by Nate79 »

Who are these 4 kids?
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Sandtrap
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Re: 2nd house, for Univ. kids/students

Post by Sandtrap »

Questions: :?:

Are you planning to purchase a residential income property to rent to university students in an area next to a university where that is the clientele?

Are you related to the university to students (relatives and own children) or are you planning this as an investment and diversification of income stream?
(please clarify)

Are you planning to be a landlord?

Are you planning to invest in additional rental properties over time?

Is this a SFH (single family home) in a residential neighborhood and you plan to rent 4 bedrooms?

Or, is this a fourplex in a multi unit housing zoned area and you plan on renting each of the quads?

thanks!
j :happy

I have had and still have rental properties next to major universities with various interesting results...... :shock:
(including renting to family and relatives etc......
Last edited by Sandtrap on Sun Oct 18, 2020 10:00 am, edited 2 times in total.
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Watty
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Re: 2nd house, for Univ. kids/students

Post by Watty »

I assume that this is for 4 students that are your kids or at least people that you know.

I know someone that bought a two bedroom condo for her two daughters that were going to the same large state university at the same time. After the first year one of the daughters changed majors to something that was only offered at at different campus so she left. The remaining daughter was not good at finding roommates so the second bedroom was empty most of the time. That worked out nicely for her since it sounded like her boyfriend basically lived in the condo. :annoyed

Be sure to Google "(school name) graduation rate". At some state universities this is surprisingly low. Some of the students may also decide to move somewhere else like a fraternity, sorority, or just some place that they like better.

The odds that all 4 kids will be there for the entire time are not that great.
Mrxyz wrote: Sun Oct 18, 2020 1:08 am Anything else to think about?
1) One of the problems you will have is that when you are ready to sell the house it can be tricky to sell or rent a house that is for student housing since there is a very small window in the springtime when people are looking for student housing for the next year. For example when there is not a pandemic going on few people would be looking to buy or rent student housing at this time of the year.

2) Pay lots of attention to parking. With four students you really should have four parking spaces that don't block each other for it to be good student housing. Even if these students don't need that much parking it will be hard to sell or rent student housing without good parking.

3) Be sure that renting rooms like that is legal. Even if it is rented like that now that does not mean that it is legal so you still need to research it. If this is an off campus house in an area that is not dedicated to student housing there may be zoning restrictions to prevent renting it like this. For it to be a legal rental like this you may also need to upgrade it to apartment building codes with things like fire sprinklers.

4) If you will be renting individual room then there is a lot of potential liability. I saw a news article a while back where someone was doing that and one roommate sexually assaulted another and the landlord was sued for not properly screening the renters. I did not hear how that turned out. It has been a while but when my son was in college I think his apartments were rented to groups of friends who selected each other and rented it as a group. If you rent individual rooms and there is damage to a common area you will likely not be able to determine who is responsible for the damage.

I don't think that you included insurance in your numbers. In addition to cost it might be difficult to even get and the insurance companies may have additional restrictions.
humblecoder
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Re: 2nd house, for Univ. kids/students

Post by humblecoder »

Mrxyz wrote: Sun Oct 18, 2020 1:08 am Hi
I am planning to buy a small house for 4 Univ. students for the next 3 years or so. I want to run some numbers by you and want some recommendations and suggestions;

200k house, I plan to buy it cash. The property tax is around 2k/year. The 4 kids are to pay $400/month plus utilities which will be around $50 per month. So 400 x 4 kids x 12 x 3 years = $57600. I plan to sell the house after 3 years without any profit, at same price. I figure maintenance will be around $5000 per year.

What did I miss in the numbers?
Do I ask the kids to sign any renter's agreement? How do I get such an agreement? - No I have never been an landlord like this before.
Do I get monthly payments from the kids or have every 3 monthly for 'safety'?
Do I pay taxes on this 'income'?
Anything else to think about?

Thanks
Let's assume you get the full $57,600 that you expect to get. Looking at the expense side, here is what I see in the best case:

Maintenance = $20,000
Property Taxes = $8,000
RE commissions when you sell (assume 5%) = $10,000
TOTAL EXPENSES = $38,000

So that means your profits would be $19,600. That is a 9.8% return over three years which equates to about a 3.1% annualized rate of return. Given the amount of risk involved with this endeavor (vacancies, excessive repairs/damage, value of real estate goes down) and the fact that you are going to need to invest your time into this scheme, that is a pretty lousy ROI.

If you have $200K sticking around, put it in a stock index fund and call it a day. Better expected ROI for no work.
neverpanic
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Re: 2nd house, for Univ. kids/students

Post by neverpanic »

Mrxyz wrote: Sun Oct 18, 2020 1:08 am Hi
I am planning to buy a small house for 4 Univ. students for the next 3 years or so. I want to run some numbers by you and want some recommendations and suggestions;

200k house, I plan to buy it cash. The property tax is around 2k/year. The 4 kids are to pay $400/month plus utilities which will be around $50 per month. So 400 x 4 kids x 12 x 3 years = $57600. I plan to sell the house after 3 years without any profit, at same price. I figure maintenance will be around $5000 per year.

What did I miss in the numbers?
Do I ask the kids to sign any renter's agreement? How do I get such an agreement? - No I have never been an landlord like this before.
Do I get monthly payments from the kids or have every 3 monthly for 'safety'?
Do I pay taxes on this 'income'?
Anything else to think about?

Thanks
Based upon this post and the questions you have raised, I do not think this is the right project for you at this point in your investing journey. Being a landlord is hard enough. Seeking to become a landlord in student housing with 4 tenants in a single unit is active pursuit of a whole set of potential problems few people can ever be ready for.

But maybe there's a backstory that can make your plan make sense. What is the purpose of your purchase? And why are you limiting the window to 3 years?
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
humbledinvestor
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Re: 2nd house, for Univ. kids/students

Post by humbledinvestor »

OP, please don’t do it. Invest it in VTSAX or S&P index instead and enjoy life.
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Re: 2nd house, for Univ. kids/students

Post by LadyGeek »

This thread is now in the Personal Finance (Not Investing) forum (house purchase).
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Re: 2nd house, for Univ. kids/students

Post by LivingTheDream »

I'm going to make an assumption... by stating that your timeframe is 3 years or so, I assume your child (or close relative) will be staying in the house during their college years.

I did the exact same thing & it worked out great (for my intended purposes... providing good, affordable housing for my son & his friends while also helping my son develop home-ownership skills... he served as the property manager). My experience was:

$175k (cash)
$12k annual rent (my son was rent-free)
$5-7k annual expenses ($1800 house insurance, $2000 property taxes, $400 umbrella/liability insurance, maintenance costs were $800-2600)
I netted $175k from sale (realtor commissions were covered by increase in value)
(I owned for 4 years)

It didn't create great ROI, but that wasn't my goal. It was a great experience for my son & his friends (there was some minor turnover in tenants, but son handled), I earned bond-like returns, albeit for more risk. Utilities were more expensive than I expected at $400 per month, but the kids handled those. I had the students & their parents sign lease agreements (downloaded a free template & customized to suit my needs). And yes, you'll need to pay taxes on the rental income.

As others implied/stated, the only way it works well (in my opinion) is if you have an on-site property manager that you trust to keep damage low & that can deal with contractors, turnover, etc.
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Re: 2nd house, for Univ. kids/students

Post by acegolfer »

Nate79 wrote: Sun Oct 18, 2020 7:51 am Who are these 4 kids?
This is the most important information that OP failed to include.
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Re: 2nd house, for Univ. kids/students

Post by tibbitts »

Mrxyz wrote: Sun Oct 18, 2020 1:08 am Do I pay taxes on this 'income'?
Why "income" in quotes? Because you anticipate only having losses?
softwaregeek
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Re: 2nd house, for Univ. kids/students

Post by softwaregeek »

Landlording is hard enough. I can't even imagine doing it for college kids, if it weren't a full time job.
manatee2005
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Re: 2nd house, for Univ. kids/students

Post by manatee2005 »

tibbitts wrote: Sun Oct 18, 2020 11:20 am
Mrxyz wrote: Sun Oct 18, 2020 1:08 am Do I pay taxes on this 'income'?
Why "income" in quotes? Because you anticipate only having losses?
Depreciation
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Re: 2nd house, for Univ. kids/students

Post by manatee2005 »

acegolfer wrote: Sun Oct 18, 2020 11:10 am
Nate79 wrote: Sun Oct 18, 2020 7:51 am Who are these 4 kids?
This is the most important information that OP failed to include.
It’s safe to assume he’s related to at least 1 kid. And the house he found has 4 bedrooms so that’s why he’s talking about 4 kids.
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Mrxyz
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Re: 2nd house, for Univ. kids/students

Post by Mrxyz »

OP here.
Thanks for all your feedback.
Here are some clarifications.

Yes, one of the 4 kids is mine.
3 years because - he is currently in college as freshman.
I am NOT using this process a way to make money. I am fine if I am even or slightly lower. The money involved is <5% NW.
BTW, one kid pays around $8000 per year for dorms = $24,000 over 3 years which I 'save' - at least in theory.
Good point about making my kid the property manager.
Templates for leasing - where do I find them?
Utilities - the 4 kids will share the costs.
House and umbrella liability insurance costs need to be added !
Will look into the legal aspects but lots of housing around this house I am looking at who have renters.
Yes, it is off campus housing.
It is single family house with 4 bedrooms and 2 baths.
Parking - one car garage, and the rest on the driveway or street. Street parking is allowed.

Anything I missed?
Thanks
stan1
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Re: 2nd house, for Univ. kids/students

Post by stan1 »

Get the other kids parents to co-sign the lease/rental agreements. Pretty common in college towns for higher quality properties where the market can bear the extra selectivity (location, condition).
neverpanic
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Re: 2nd house, for Univ. kids/students

Post by neverpanic »

Mrxyz wrote: Sun Oct 18, 2020 1:40 pm OP here.
Thanks for all your feedback.
Here are some clarifications.

Yes, one of the 4 kids is mine.
3 years because - he is currently in college as freshman.
I am NOT using this process a way to make money. I am fine if I am even or slightly lower. The money involved is <5% NW.
BTW, one kid pays around $8000 per year for dorms = $24,000 over 3 years which I 'save' - at least in theory.
Good point about making my kid the property manager.
Templates for leasing - where do I find them?
Utilities - the 4 kids will share the costs.
House and umbrella liability insurance costs need to be added !
Will look into the legal aspects but lots of housing around this house I am looking at who have renters.
Yes, it is off campus housing.
It is single family house with 4 bedrooms and 2 baths.
Parking - one car garage, and the rest on the driveway or street. Street parking is allowed.

Anything I missed?
Thanks
You have a clear goal, which is good. Breaking even does provide a net gain over paying rent for the next 3 years, so I understand the strategy. I would strive to beat that, however, because things have a tendency to cost more than expected. In your case, run your figures based on 3 occupants, not 4.
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
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Re: 2nd house, for Univ. kids/students

Post by LivingTheDream »

Mrxyz wrote: Sun Oct 18, 2020 1:40 pm OP here.

Templates for leasing - where do I find them?
It's been a few years, but I think I used RocketLawyer.com for the sample/template, but customized significantly (based on personal preferences & points of emphasis). And I would recommend using state-specific template (based on location of rental property, not where you live).
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oldfort
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Re: 2nd house, for Univ. kids/students

Post by oldfort »

Mrxyz wrote: Sun Oct 18, 2020 1:08 am Hi
I am planning to buy a small house for 4 Univ. students for the next 3 years or so. I want to run some numbers by you and want some recommendations and suggestions;

200k house, I plan to buy it cash. The property tax is around 2k/year. The 4 kids are to pay $400/month plus utilities which will be around $50 per month. So 400 x 4 kids x 12 x 3 years = $57600. I plan to sell the house after 3 years without any profit, at same price. I figure maintenance will be around $5000 per year.

What did I miss in the numbers?
Do I ask the kids to sign any renter's agreement? How do I get such an agreement? - No I have never been an landlord like this before.
You want to want to be a landlord without a rental agreement? This sounds crazy.
Do I get monthly payments from the kids or have every 3 monthly for 'safety'?
Do I pay taxes on this 'income'?
Of course, you pay income tax on rental income. Why is this a question?
Anything else to think about?
Why do you want to rent to college students? They're the most likely to party and trash a place. Make sure you get a large deposit.
Thanks
SimonJester
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Re: 2nd house, for Univ. kids/students

Post by SimonJester »

I can guarantee you these 4 kids would not be the same ones at the end of the 3 years. Have two kids in college right now and none of their room mates made it more then one year. Be prepared for midnight move outs with a gap in rent and or a new room mate mysteriously showing up, not to mention girl/ boy friends. I would budget 10 - 20K per year for damages alone.
Last edited by SimonJester on Sun Oct 18, 2020 3:05 pm, edited 1 time in total.
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Re: 2nd house, for Univ. kids/students

Post by exigent »

We seriously considered this, to the point of actually having an accepted offer, but thought better of it and pulled the plug during the diligence period. This would have been for our own kids to live in — we live near a college town and currently have three attending there with another one likely to follow suit. We could have easily afforded it and would’ve likely paid cash.

The main motivation for not going through with it, aside from a desire to keep our lives (relatively) simple, was that we didn’t want to be in the position of dictating where our kids would live (or who they would live with) while in college. We almost certainly would’ve come out ahead (aside from the savings on living costs, the property has appreciated considerably), but it wasn’t worth the possible headaches or the lack of freedom/flexibility for our kids.

The moment we pulled out of the deal, we felt a huge sense of relief and haven’t regretted that decision once.
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Re: 2nd house, for Univ. kids/students

Post by LivingTheDream »

SimonJester wrote: Sun Oct 18, 2020 2:42 pm I can guarantee you these 4 kids would not be the same ones at the end of the 3 years. Have two kids in college right now and none of their room mates made it more then one year. be prepared for midnight move outs with a gap in rent and or a new room mate mysteriously showing up, not to mention girl/ boy friends. I would budget 10 - 20K per year for damages alone.
That wasn't my experience (3 of 4 roommates, not including my son, stayed for whole 4 years; no damage), but I realize it does happen. And not a bad idea to plan for worst-case scenarios.
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Re: 2nd house, for Univ. kids/students

Post by Broken Man 1999 »

A fellow member of a club we were in lived in a condo purchased by his father while he and his siblings attended the University of Florida. So, his father had more than just three years to receive income, and save dorm fees.

It might work out well, but unlike my tale you are looking a shorter term where you have someone at ground zero to watch things.

On the other hand, given covod19 you might be able to rent for years after your student is no longer living there.

I would only do this if you are willing to make a long-term landlord comittment.

A well-located home, coupled with good screening might see you having good results.

If you are only looking at three years, I wouldn't do it, buying and selling expenses, along with possibly selling in a down market might see you pile up losses.

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Re: 2nd house, for Univ. kids/students

Post by cchrissyy »

Mrxyz wrote: Sun Oct 18, 2020 1:40 pmBTW, one kid pays around $8000 per year for dorms = $24,000 over 3 years which I 'save' - at least in theory.
i think the better comparison for what you save is the 400 per month that you think is the fair price for a room rental in a house for the next 3 years
123
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Re: 2nd house, for Univ. kids/students

Post by 123 »

You need to plan for much higher wear and tear.

While you may intend to rent to 4 kids (4 bedrooms?) you are likely to end up with 8 to 10 kids living there. Plan on two to each bedroom (each kid will have a "friend"). And if the place has a living room or den someone will make a room out of that. When I was in college in a shared apartment the head student who paid the rent to the landlord rented out a couch in the living room to another student. We all got along fine but I'm sure the impression of any parent who would have stopped by (we made sure they didn't) would have referred to it as a "zoo".

Some students don't believe in paying for time they're not there. Like summer vacations when they go home or if they decide to take a "breather" at home for a quarter/semester. The years of being student are years of discovery and change its likely you'll have lots of unanticipated turnover, students drop out or change their plans. Getting a new tenant in the middle of an academic term can be unlikely if not difficult.
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Re: 2nd house, for Univ. kids/students

Post by sd323232 »

Mrxyz wrote: Sun Oct 18, 2020 1:08 am Hi
I am planning to buy a small house for 4 Univ. students for the next 3 years or so. I want to run some numbers by you and want some recommendations and suggestions;

200k house, I plan to buy it cash. The property tax is around 2k/year. The 4 kids are to pay $400/month plus utilities which will be around $50 per month. So 400 x 4 kids x 12 x 3 years = $57600. I plan to sell the house after 3 years without any profit, at same price. I figure maintenance will be around $5000 per year.

What did I miss in the numbers?
Do I ask the kids to sign any renter's agreement? How do I get such an agreement? - No I have never been an landlord like this before.
Do I get monthly payments from the kids or have every 3 monthly for 'safety'?
Do I pay taxes on this 'income'?
Anything else to think about?

Thanks
rental for college kids? i hope you buy really good insurance and a lawyer. also what is ur game plan if police find drugs on property, what if there is a fight, injury? potentially you open up yourself to millions of legal problems, so great lawyer is a must.
123
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Re: 2nd house, for Univ. kids/students

Post by 123 »

sd323232 wrote: Sun Oct 18, 2020 4:19 pm rental for college kids? i hope you buy really good insurance and a lawyer. also what is ur game plan if police find drugs on property, what if there is a fight, injury? potentially you open up yourself to millions of legal problems, so great lawyer is a must.
+1 Excellent point, you need only one tenant, guest, or "hanger-oner" to create a real legal mess with an altercation or drug bust, etc. The kids have no money themselves so it's easier to go after the guy with the deep pockets, Hello Mr Landlord. So maybe they can't get a court judgement against the landlord but the process will not be pleasant
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humblecoder
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Re: 2nd house, for Univ. kids/students

Post by humblecoder »

Mrxyz wrote: Sun Oct 18, 2020 1:40 pm
I am NOT using this process a way to make money. I am fine if I am even or slightly lower. The money involved is <5% NW.
If your motivation is not financial, then what's the point of this exercise? Just looking for another hobby?

Just pay the $8K/year dorm fee or pay $400/month for an off campus rental and let somebody else take the financial risk and deal with the landlord pain. Then take the remainder of your $200K and invest it elsewhere. You're more likely to be even or slightly lower, but with less effort.
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Re: 2nd house, for Univ. kids/students

Post by LivingTheDream »

OP,

Not sure if you were asking for opinions about whether or not to travel this path, or were simply asking for opinions on potential considerations. Several posts have advised against going this route at all. I'll offer (in addition to my earlier post on things to consider) my opinions on whether or not to in general.

While I admit there are risks, I believe there are also rewards (primarily to your kid). Many posters seem to have had bad experiences, and I'm sure there are plenty of people who share those bad experiences. However, my experience was good. My son had great friends (made during freshman-year). They all participated in the house-hunt (heavily; I relied on their & the realtor's judgement, as I bought without having visited the house). They did have parties, friends stay on couches (including parents of the other kids stay on football weekends, although I always preferred to stay in hotels), etc. Yes, I was fortunate to actually make money in the process (as did my son by staying rent-free for 4 years!). Also, in my opinion, some of the real estate market risk is mitigated if you're talking about a college-town (& walking distance to campus).

And one last point of emphasis, a good liability/umbrella policy is (in my opinion) a must.

(I forgot to address your question about rent collection... I collected rent monthly (lease was 12-months, but I charged the full year's amount during the 9-month school year), and offered a modest discount for semi-annual (school-term based) payments (which one parent took advantage of))

Good luck.
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flyfishers83
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Re: 2nd house, for Univ. kids/students

Post by flyfishers83 »

My parents bought a duplex for me to live in. I lived there for maybe 7 years. End of undergrad, law school and a bit after. My parents made a little bit of money, and I saved a LOT of money, as my rent was taking care of the place and finding tenants. My parents kept for several years after I moved away until they got tired of the place.
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gwe67
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Re: 2nd house, for Univ. kids/students

Post by gwe67 »

In the current environment, off-campus houses are where the parties are. Near me, and within the last month, there have been two fatal shootings at such parties. Consider the risks.
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mc126
Posts: 10
Joined: Tue Apr 19, 2011 9:01 am

Re: 2nd house, for Univ. kids/students

Post by mc126 »

My son's landlord in a college town charges rent per semester with move in dates much like the college with maybe an extra week to move in /move out. He also has a discounted summer rent amount or a charge for leaving your stuff there in the summer. I think that probably works better for the landlord in the long run as he didn't have to worry about monthly rent being paid. You had to pay full semester before moving in.
Last edited by mc126 on Mon Oct 19, 2020 12:09 pm, edited 1 time in total.
arsenalfan
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Joined: Mon Dec 09, 2013 12:26 am

Re: 2nd house, for Univ. kids/students

Post by arsenalfan »

I have a bunch of rentals in VHCOL college/grad school urban area that turn over every year.

1. Make LLC separate checking account, separate credit card, renter landlord insurance and umbrella, gmail account.
2. DocuSign Lease with all tenants and 1 parent co-signer for each tenant.
3. Clear structure of fees, move-in, move-out expectations. DocuSign Initialed on everything. Fees for leftover trash/furniture, disposal jams, damages fee schedule (usually contractor receipt + X% admin fee), etc. Have protocol for noise complaints, parking, whatever problems you forsee in the property. Consider cleaning schedule. Allot the garage space/consider charging more for that spot. Delineate clearly grounds maintenance expectations.
4. Specify in lease what utilities included (internet? linear TV?)
5. Highest executive function tenant is point of contact.
6. Get a handyman/contractor/plumber/roofer/HVAC contractor reccs. Get all repair requests videotaped/photos to the gmail. Streamlines repairs (handyman or you can then pickup supplies before going to fix).
7. Measure appliances/get model numbers. They're going to break/need replacing. Might as well have the info upfront so you can just order off Home Depot.
8. Use Cozy for autopay
Lee_WSP
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Re: 2nd house, for Univ. kids/students

Post by Lee_WSP »

Why do you want to buy instead of rent?
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gwe67
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Re: 2nd house, for Univ. kids/students

Post by gwe67 »

You are probably going thru with this regardless. But, having lived in this type of situation in college, I have these questions:

Who gets the master bedroom? Your kid? For the same rent as the other kids? Assume that one of the two bathrooms is in the master. Can anyone else use this bathroom? Are the other three kids sharing one bathroom which is to be used by guests as well? Do all of the bedrooms have unique locks, for security?

This living arrangement is far from optimal.
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quantAndHold
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Re: 2nd house, for Univ. kids/students

Post by quantAndHold »

Mrxyz wrote: Sun Oct 18, 2020 1:40 pm OP here.
Thanks for all your feedback.
Here are some clarifications.

Yes, one of the 4 kids is mine.
3 years because - he is currently in college as freshman.
I am NOT using this process a way to make money. I am fine if I am even or slightly lower. The money involved is <5% NW.
BTW, one kid pays around $8000 per year for dorms = $24,000 over 3 years which I 'save' - at least in theory.
Good point about making my kid the property manager.
Templates for leasing - where do I find them?
Utilities - the 4 kids will share the costs.
House and umbrella liability insurance costs need to be added !
Will look into the legal aspects but lots of housing around this house I am looking at who have renters.
Yes, it is off campus housing.
It is single family house with 4 bedrooms and 2 baths.
Parking - one car garage, and the rest on the driveway or street. Street parking is allowed.

Anything I missed?
Thanks
Okay, so now that it’s clear what you’re attempting...

We did that with one kid, except that it was a 2 bedroom condo. It was in a different city than where we live, and our goal was to give the kid a decent, stable place to live for a good price, with a minimal amount of extra work. It was in a property market where prices were increasing rapidly, so it allowed us to lock in a price, instead of dealing with 10%+ rent increases every semester. We chose an apartment style condo because we wanted to deal with as little maintenance as possible. We made the kid responsible for finding a roommate, collecting rent, getting utilities paid, dealing with the condo association, calling the plumber when they managed to stuff up the toilet, etc.

It actually worked pretty well for us, and all in, we came out ahead of where we would have been if she’d rented. That said, of the three kids, this one was the super responsible one, and when we handed her the keys, we knew she would do a better job of taking care of the place than we would have ourselves. Even with that, she managed to go through six roommates, a set of drapes, and a kitchen floor. Even the most even keeled people have a lot of trauma and drama at that age. If kid had stayed in that city after graduation, we probably would have kept the place and continued to rent it out to students with her managing it, but she didn’t, and we didn’t want to be long distance landlords.

The other kids went to school in places with more stable housing markets. We just had them rent apartments. It was easier. I wouldn’t do it with a freestanding house, or anyplace with more than two bedrooms. Too many potential maintenance headaches, and every additional kid increases the trauma and drama potential exponentially.
Yes, I’m really that pedantic.
Topic Author
Mrxyz
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Re: 2nd house, for Univ. kids/students

Post by Mrxyz »

Wow, excellent response guys and gals!

So, where do I start?
No, I do not wish to save a lot of money or make a lot of money off this deal.
The dorm is NOT comfortable or fun to stay. Small, crowded etc. Esp. with COVID not getting better x months, a house with more space, ventilation, same group of house mates MAY be better than drom exposure. Who knows for sure.......but a point to consider none the less.

My kid's dorm mate and 2 other friends - all boys. Know each other x >5 years or longer.
Which bed room for who? - These house really do not have much size difference in the multiple bedrooms. Like upstairs larger bedroom may face the road and thus noisier, but basement smaller room is less noise and does have a spare living room next to it etc etc.
Locks - good point, doubt anyone wants them.

arsenalfan - awesome list of things to consider.....
" I have a bunch of rentals in VHCOL college/grad school urban area that turn over every year.

1. Make LLC separate checking account, separate credit card, renter landlord insurance and umbrella, gmail account.
2. DocuSign Lease with all tenants and 1 parent co-signer for each tenant.
3. Clear structure of fees, move-in, move-out expectations. DocuSign Initialed on everything. Fees for leftover trash/furniture, disposal jams, damages fee schedule (usually contractor receipt + X% admin fee), etc. Have protocol for noise complaints, parking, whatever problems you forsee in the property. Consider cleaning schedule. Allot the garage space/consider charging more for that spot. Delineate clearly grounds maintenance expectations.
4. Specify in lease what utilities included (internet? linear TV?)
5. Highest executive function tenant is point of contact.
6. Get a handyman/contractor/plumber/roofer/HVAC contractor reccs. Get all repair requests videotaped/photos to the gmail. Streamlines repairs (handyman or you can then pickup supplies before going to fix).
7. Measure appliances/get model numbers. They're going to break/need replacing. Might as well have the info upfront so you can just order off Home Depot.
8. Use Cozy for autopay "


I plan to have contract and get parents co signatures etc.
Rent will remain same for 3 years unless roomates change.
Will have rent for the whole year or have it priced for 2 semester.
Rent will be 3 monthly so that I have early notice of someone leaving.
Insurance - home owners and liability insurance with umbrella after setting up LLC.


flyfischer83 - Thanks for sharing your experience.


On the other hand---

Great point by humblecoder - yes, it would be easier to pay $400/month and let the other person take the risk..... but the town is close by and my in laws live 2 miles away from the houses we are considering.........I do not (YET) see too many downsides......even after reading all the negative opinions.

Current problem - Cannot find a decent house which is available for sale. So will keep looking.

Thanks to all.
Did I miss commenting about anything you have brought up?

Keep your suggestions, comments and recommendations coming please!
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