Does anyone have any solid information regarding setting up apartments in college towns? As a former student, it seems like this would be a smart way to go, as there is a constant influx of students especially in known college towns. Aside from the worst case scenario risks of a college student "trashing" the apartment, what are some other liability risks that one should be aware of? I think if you used standard, replaceable materials and ensured tenants had good co-signees, it seems like the profit could be generous, especially during crunch time when students are just looking for a place close to campus to live. Does one need to be part of a large investment group with a huge amount of capital to get started? What are the best ways that people set up real estate groups in this manner? If anyone has any experience in this area, I would appreciate opinions and advice in this thread. Thanks!
I live in a university town here in the UK, with a very large student population, and the economics of letting to those students are difficult. For almost a third of the year they stand unoccupied (summer recess), and there's a lot of hassle with student houses as you can imagine - many more broken fittings, fires etc than the general population. Maybe hiring a letting agency to run would help, but it'd cut your already small profits. YMMV though.
I know a guy here who borrowed about a million several years ago to build a complex of small efficiency apartments a short walk from the local university. He's been open for business for about a year, and says he's got no vacancies and a waiting list. I think that it's probably best to do such a thing with fairly new construction, use at least some of the profits to try to pay down any mortgage fairly quickly, then consider selling out before you get to the point where the buildings need lots of maintenance and repairs. I'd also say to be picky about who you rent to, and try to set up some sort of security detail to keep any troublemakers who are "visiting" from causing problems.
Are the profits indeed that small? I would think that with high demand, you can charge more, especially with close proximity to campus. I would also think that you could market the hell out of it and work on outsourcing everything else. Even with maintenance, if you set up a trustworthy contractor relationship, I would think that it could work. I would be nervous about liability costs though, probably because it just makes me nervous in general. There's some very useful information posted here, thank you for your replies!
There is surely serious money to be made in real estate business although it includes some drawbacks such as renovation and other running costs. With rental prices in rise it is possible to pay the mortgage off quite quickly.
We don't have the so called college towns here but there are several provinces which have the export processing zones. It is a factory town where workers are mostly migrants from other provinces. Investors have a good time buying lots and land (for the intention of small condominiums or apartment compound). What's good is the category because you can build a cheap apartment for laborers or a classy apartment compound with swimming pool for factory executives and management officers. It is a good investment if you get ahead but when the export processing zone is already established, the value of real estate had already risen.
You are renting to students. In other words, to people with little to no income. So they will go for the cheapest available accomodation that fits their needs when it comes to quality and distance. So distance is of course key... but I know many students who don't mind taking a bus to save money on the rent. If I was renting to students, I'd do the whole rent a room thing. Instead of charging $500 for an apartment with two rooms, rent out the rooms separately for $300 and you'll get more rent while still offering a cheap accomodation. Students don't mind living together. (at least not in Europe)
That's right, students would obviously opt for a cheap accommodation since they have no income. So I guess most of the housing for students are similar to boarding houses with a room that comes with a bathroom although a villa can have many rooms with a common receiving area. Price is the primary consideration but a classy apartment can also be a good prospect.
Apartment businesses in my area have been very successful all these years. I live in a town where there are many big universities so students from neighboring towns would usually come here to study. Universities in my town are surrounded with apartments which are usually full all year round. Another factor that makes apartments and other real estate rentals here is the big influx of tourists coming in almost every day. Some of our family friends have these kinds of businesses and they're quiet successful at them. Mostly, student apartments here have house rules posted on each room and receiving area. Even before contracts are signed between the owner and the parents of the student tenants, rules are already presented to them for discussion and adjustment. I noticed that this kind of technique has been effective for our landlord friends and most of the time, they're also lucky to have well behaved tenants too.
I think it is a good idea but you may want to discuss the possibilities with thos who are already doing it to get a heads up of the dos and do nots when renting to students. I think you would need to be especially cognizant of getting liability insurance. Maybe the best market would be in renting to graduate students who are often married and are not going to problematic in the way of younger students. I think I might try to provide graduate student apartments.
