Author Topic: Student apartment as first property?  (Read 1735 times)

lpep

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Student apartment as first property?
« on: May 19, 2015, 12:16:09 AM »
I'm looking into buying my first bit of real estate to diversify (current NW is about $100k, 15% cash since I'm moving back to the US soon, 55% VTSAX in taxable and Roth IRA, rest in a couple individual stocks--I know, I know).

My hometown is Raleigh, NC, and I've done a bunch of apartment hunting there and know the neighborhoods and rents fairly well. NC State University is there and expanding, and it's also close to Research Triangle Park with lots of tech companies. In the downtown area, near the university, there has been more apartment construction lately but it's been high-end yuppie apartments out of most students' ranges. Raleigh is somewhat of a hipster capitol.

There are a few 4BR apartments for sale in a student complex near a whole bunch of other student apartment complexes. The apartments are listed at about $108k and say they're renting for $1500 (1.4% rule, don't know how to calculate cap rate without knowing HOA fees and expenses for student apartments). I'm not even in the country, so I'm obviously not going to buy now, but would it make sense to keep an eye out for this kind of property in a few months, when I'm in the area? I could self-manage it, and renting by the bedroom to students seems to mean rent can be higher than other 2 or 3BR properties that would go to couples or families. I would put down 20% and pay off the mortgage somewhat aggressively, with the goal of having no mortgage in about 10 years, when I plan to FIRE. Aside from the whole renting to college students thing (I would aim for international grad students!), there doesn't seem to be much downside... any thoughts? Thanks!

sammybiker

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Re: Student apartment as first property?
« Reply #1 on: May 19, 2015, 01:42:51 AM »
Sure, sounds good!

I would connect with other area Raleigh landlords and have them take a look at the properties in question...they would be able to give you some great feedback on why/why not.  Properties that sit/don't sell generally don't sell for a reason - the local pros passed.

Maybe some Raleigh landlords here on MMM will chime in?  If not, head to BP and find out who the local players are. 

lpep

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Re: Student apartment as first property?
« Reply #2 on: May 19, 2015, 01:55:11 AM »
Thanks! I've been reading away over at BP. This is an exciting idea... :)

thedayisbrave

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Re: Student apartment as first property?
« Reply #3 on: May 20, 2015, 06:39:42 AM »
Hey! I own one of those units that you speak of (I live in Raleigh too).  Rushing off to a meeting now but I am keeping this up on my computer so I remember to PM you when I get back. 

CowboyAndIndian

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Re: Student apartment as first property?
« Reply #4 on: May 20, 2015, 06:46:13 AM »
Aside from the whole renting to college students thing (I would aim for international grad students!), there doesn't seem to be much downside... any thoughts?

Any Masters of Phd student would be good. They are older and wiser and treat your property well.

My rule for one of my apartments is to avoid undergraduate students.

bluestone

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Re: Student apartment as first property?
« Reply #5 on: May 20, 2015, 07:56:50 AM »
Graduate students are great because they're more likely to stick around in the summer and many are looking for places for the duration of their studies. I've had good experience with law students. Too busy to move.