Student Housing / Rentals

[Tompety03]

Many colleges are planning for online classes in the fall and there is a chance that could continue into 2021.

 

I wonder if that will present opportunities to buy rental properties around colleges as many landlords may not be able to bridge that gap.  The impact could be severe in college towns where most of the economic activity and rentals revolves around the college.  So not colleges in urban areas where there are other groups to absorb the supply (Harvard in Boston or UC San Diego).

 

I am raising this idea because my family just moved to the Dartmouth area and the vast majority of the economic activity in town revolves around the students. Dartmouth is not going anywhere in the long-term.

 

This is just an example, but I am curious if others have considered this.  I've always been interesting in buying rental properties around quality schools and this seems like a good moment in time to do that.

 

Chris

[rb]

I've looked at doing that in the past when the prices were really good (20-30%) below where they are today and I've passed.

 

Turned out it's not such a great business. Students tend to destroy these places. Think renovations every summer. Even during the year you get to put up with a lot of crap: late rents, tenants breaking things, all sort of complaints arising from partying and other stupid/illegal shit.

 

You can make a decent rate of return but it's really not worth the aggravation. That being said, if you want to buy 10-15 of these things, quit your job and become a property manager then you'll probably do well.

[Tompety03]

That is a great point! One way to reduce those headaches is to focus on graduate student style units within these areas. So not the party house with 6 bedrooms, but 1-2 bedroom units that are higher quality.  For more responsible grad students or those with families.

 

Still headaches and manual effort that needs to be factored into the price/return.  I am not close to pulling the trigger on this, but was just thinking about pockets of the economy that will be impacted. 

 

Chris

[Gregmal]

That is a great point! One way to reduce those headaches is to focus on graduate student style units within these areas. So not the party house with 6 bedrooms, but 1-2 bedroom units that are higher quality.  For more responsible grad students or those with families.

 

Still headaches and manual effort that needs to be factored into the price/return.  I am not close to pulling the trigger on this, but was just thinking about pockets of the economy that will be impacted. 

 

Chris

 

Ive done a little bit here and one easy way to avoid many of the headaches is to mandate a cosigner and look for folks who have their expenses paid for by others, IE parents or grants, etc. That isn't to say you won't have problems. Definitely will have your fair share of drywall repairs and broken windows, but thats not too bad when mom and dad guarantee the repair at a 30% markup! Its like allowing pets with residential. First thought is that it ruins the floors and makes the unit stink. But once you realize you can charge 5% more per month, charge one time pet fee, take an extra security deposit, and more or less make back the cost of a new floor(typically carpet) in 18-24 months plus ALWAYS have a fully paid for thorough deep cleaning when the pet lover exits... its a good problem to have.

[Viking]

I am thinking AirBNB units will also be coming on the market at the same time.

 

Anecdotally, where is live in greater Vancouver in my cul-de-sac every young adult (university student or young adult) has moved back home for the summer. Most would have stayed in their rental for the summer and worked.

 

Where my older daughter was renting (house with 3 - 3 bedroom units) two recently came up for rent. The landlord, who owns the house, said he was dropping the rent to ensure he got the 2 units rented and to good tenants. He was successful.

 

For renters this is likely a great time as there is lots of supply. Good chance to upgrade and possibly lower cost.