When I was a kid my Dad bought 2 investment properties in West Chester, PA just off of the college campus. At that time West Chester University didn't have nearly the enrollment that it has now but there was always a demand for off campus housing for students. The properties needed a bit of work so each week we would go out there and get them ready for the upcoming rental season. Long story short, 21 years later, he still has the properties and they have more than doubled in value and he still rents them out every year with no problem at all. In fact, with the increase in student enrollment at the school he can afford to be a lot more picky with who he rents to.
If you buy a property correctly in a college town it can be a cash register for you for a VERY VERY long time. Here are a couple things that you may want to consider while you're doing your research.
1. You make your money when you BUY the property.
The profit is in the numbers. If your looking to have cash flow each month than
you need to make sure that your PITI ( pricinple interest taxes insurance ) and
other operating expences are going to be covered by the monthly rent that you
receive from your tenants. Many people love the idea of being a landlord and
getting monthly checks in the mail, but they operate on idealistic numbers and
when they have trouble finding a tenant they're in big trouble. If you want to
more about the Math, email me and I will send you a very comprehensive
worksheet that will help you to calculate monthly costs vs profit. It's not
rocket science.
2. Research the area.
College towns are different than other areas because the activity is seasonal.
If the town that you live in is rural than it may be a safe bet that your
property won't be rented during the summer months. This needs to be taken into
consideration when you calculate your monthly rent. Many leases in college towns
run from August to June or from semester to semester. A quick stop into your the
local Housing Authority or the University's Housing Department and you can get
an idea of common student lease terms and renatal prices. You will also want
to see if there are any Real Estate Investors Groups in the area. Many of the
poeple in these groups are seasoned investors and can save you some time, money
and frustration if you simply ask for some guidance.
3. Property Maintenance
You DEFINITELY want to allow a larger than normal budget for this. Unless you
choose to use a property management company that will charge you a monthly fee.
In that case you'll still have to budget for it but it any upkeep won't
neccessarily be your headache. You can secure your investment by making VERY CLEAR
terms in your lease as to what the tenant will need to do in order to get their
security deposit back. It's pretty common practice to ask for 1st months rent and
a security deposit equal to the monthly rent up front. The more money that you get
upfront the better whe dealing with student rentals.
These are just a few things that you want to consider before you sign on the dotted line. But, if you're curious about buying an investment property in a college town or anywhere else gimme a call and I can help you break down some math.
Keep It Real Estate
Chris Edwards
Realtor
Cell: 484-947-6023
Email: chris.edwards@century21.com
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