Author Topic: Exploring buying a duplex in a college town  (Read 2294 times)

FrugalSaver

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Exploring buying a duplex in a college town
« on: February 14, 2017, 06:57:17 PM »
SHould this be avoided due to the obvious liability issues?

I have a line on a duplex for that rents for about $3,200 in gross rents.  If i assume insurance runs about $3,000 / year and assume the 50% rule based on a 30 year note with 25% down at 4.8%, i'd have to get annual expenses to be around $10,000 / year.

Those expenses seem high for a property that is < 10 years old, but given it's a college property, maybe that's more reasonable.  At that price point, it's not worth it.  If it's half that, it may be a bit of a gem.

so questions:

1) would you avoid it due to the clientele?

2) what is a reasonable expense ration to assume on a college rental at the upper end of the payment scale?

waltworks

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Re: Exploring buying a duplex in a college town
« Reply #1 on: February 15, 2017, 01:38:54 PM »
Your expenses won't be bad (or any worse than for any other property) as long as you make parents co-sign the lease and get a large security deposit. Or rent to graduate students/young professors.

What is the proposed purchase price of the duplex? It's hard to say much about the deal without more information.

-W

clarkfan1979

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Re: Exploring buying a duplex in a college town
« Reply #2 on: February 15, 2017, 11:57:14 PM »
Post more info.

$3,000 for insurance seems high.

I actually just got my yearly house insurance bill in the mail today.

330K house, landlord policy, 5,000 deductible, Colorado, $750/year.

rothwem

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Re: Exploring buying a duplex in a college town
« Reply #3 on: February 16, 2017, 08:52:27 AM »
I own a duplex less than a mile from NC State University in Raleigh.  I live in one half, and I rent the other.  This August, the tenants in the other side decided not to renew and I ended up renting to a couple college kids.  I'm not sure I'd do it again, and I definitely wouldn't do it if I didn't live next door.  The first couple weeks they were in there, I had to set some pretty strict expectations so I didn't end up with cigarette butts, beer cans and piles of vomit in the front yard after coming back from the bars and continuing the partying.  From time to time I have to remind them to keep it down, but I can't imagine how bad it would have been if I wasn't there the first couple weeks to nag them into not making my house "The party house".

The plus side is that I'm charging them $100 over market rent, and the money comes like clockwork because they've got rich mommies and daddies that co-signed the lease. 

kissthesky

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Re: Exploring buying a duplex in a college town
« Reply #4 on: February 18, 2017, 05:40:47 PM »
+1 for renting to grad students. Law students are the best. They generally stay for 3 years, are quiet, and mostly stay out of trouble. If you have to lower the rent a little to get a really solid grad student definitely do that. Then be a great landlord and when the law student graduates they refer their other law school friends. Rinse. Repeat.

CowboyAndIndian

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Re: Exploring buying a duplex in a college town
« Reply #5 on: February 18, 2017, 08:04:55 PM »
...
 Or rent to graduate students/young professors.
...

+1 for renting to grad students. Law students are the best. They generally stay for 3 years, are quiet, and mostly stay out of trouble. If you have to lower the rent a little to get a really solid grad student definitely do that. Then be a great landlord and when the law student graduates they refer their other law school friends. Rinse. Repeat.

+2

I picked MS/Phd Students at UPenn when I owned a rental in Center city Philadelphia. That is good for about 5 years.

The MS/Phd student is usually 22+ old. Much more mature than a 18 year old. Most of the time, they are paying for the apartment with the stipend that they earn, so they are very careful with your apartment and take care of it.
« Last Edit: February 18, 2017, 08:08:37 PM by CowboyAndIndian »

rothwem

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Re: Exploring buying a duplex in a college town
« Reply #6 on: February 20, 2017, 08:50:58 AM »
The problem that I've run into is that grad students often don't make the required 3x rent required, and are hesitant to have a parent cosign since they feel like they're "adults".  They usually don't want roommates for the same reason.  3x the rent in my place is just under $40k, and the NSF stipend, which is one of the most generous around, is $32k.

CowboyAndIndian

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Re: Exploring buying a duplex in a college town
« Reply #7 on: February 20, 2017, 10:32:18 AM »
I picked MS/Phd Students at UPenn when I owned a rental in Center city Philadelphia. That is good for about 5 years.

Forgot to add. I would NOT pick the MBA students from Wharton for a couple of reasons.

First of all, I knew they were definitely going away in 2 years to cash in on their MBA, no need for a Phd for them.

Second, every MBA student wanted changes in the lease modifying my protections in the lease.