Starting Out
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated 6 months ago, 07/04/2024
Getting Started - Interested in Student Rentals in Orlando
Hello everyone, nice to virtually meet you all.
This is my first post on BP, and I write professionally, so I apologize for the longwindedness. A little background: My wife and I have gotten very interested in REI recently. We're learning all we can while simultaneously searching for our first investment (I'm on book 3 of 5 that I picked out to read). We both attended University of Central Florida and lived in a house that my parents bought for my sister and I while we got through college, and the idea of student rentals intrigued us. We both still live in Orlando and are familiar with the UCF area. UCF is now the second largest university in the US with 70,000 or so students, and apartments are springing up everywhere. It seems safe to assume there's a market, but obviously we'll need some more research to confirm that.
We both have degrees in graphic design and work for Universal designing theme parks (with some on-site experience for both of us). I also have an MBA. We feel like this gives us a pretty good background to start, but by no means do we think we know everything we need to yet.
The area around UCF has improved quite a bit in the last 10 years and home prices have risen considerably, but it seems like there are still some promising areas to find deals. We came up with a few questions we've been wondering.
- Of course it's always important to find great deals, but how "great" is necessary for student rentals? I.e. We'd love to buy low and add value, but if the numbers seem to work on a turnkey property, is there a reason not to go that route?
- How risky are student tenants? We were pretty good kids in college, but of course we had parties and made our share of messes. I can handle some college shenanigans, but I'd also love to hear some horror stories if anyone has one.
- What sort of turnover can we expect? The idea of a natural turnover seems more of a benefit than a drawback to me, but I'd love to know some rules of thumb for just how frequent can be expected.
Any other best practices or things to consider are of course welcome. Is there anyone with experience in this niche? Or anyone with experience in Orlando? We'd love to chat any time.
Michael
Welcome @Michael Sprouls and congrats on taking the first steps. The UCF area is no secret to investors. It has long been a favorite for local investors and in the 6-8 years the word spread and it is a hotbed for many more now. Values have stayed very steady in that area, with its proximity to Oviedo and Avalon on either side that have the great schools and shopping/family friendly retail.
I know several locals that invest there and have had many clients that have purchased there as well. Student housing can be a bit trickier as far as leases go, but typically, you would rent by the room and want the parents on the lease. There are a lot more nuances to it that would make my reply several more paragraphs.
I'm on the board of CFRI, the local REIA here in Orlando and we've had a few speakers come thru on this topic, like Dixie Decker and Jeffery Taylor. You might want to come out to some of our meetings and network with local investors that can give you alot more insight and maybe get the inside scoop of some that are ready to sell off some of their properties. Let me know and I could send you an invite.
Best of luck!
@Michael Sprouls this thread of student rentals may be helpful:
Welcome Michael! I'm an investor (mostly commercial RE) in Oviedo near UCF. Love this area! I lived near the University of Oregon before moving here a few years ago and noticed that most landlords were making much more money renting by the room for U of O students. My suggestion would be to figure out that play as it seemed like a very nice return.
My real estate advice would be to try to buy right, and as always location location location! Find some sort of deal (which is hard to find right now as prices have risen substantially over the past handful of years), or some sort of value add (maybe find a fixer upper and do a lot of paint work, cosmetic, etc. yourself to get started and save money). Make sure to comp out rents and figure out the summer season, screen tenants, etc. (typical with any deal).
I don't have any experience specifically with student rentals but wish you all the best! UCF is a great, growing area to be in for sure!
@Will Gaston Yes, I found that thread almost immediately after posting this. Thank you so much for putting that together and for remaining active on this topic! There's a wealth of information in there that has been extremely helpful so far.
I think I read in there that you try to stick with higher quality properties. In your experience, will you buy move-in ready homes or do you always look for a value-add opportunity?
Thanks Travis, we loved that area when we lived out there. We lived a few miles from campus and the houses were pretty inexpensive at the time. Seems like everyone has caught on recently.
@Shawn McCormick Absolutely, we'd love to attend. We don't have a network built up yet and we'd love to meet some people who actually do this. Thank you!
Quote from @Michael Sprouls:
@Shawn McCormick Absolutely, we'd love to attend. We don't have a network built up yet and we'd love to meet some people who actually do this. Thank you!
Send me your email and I'll send an invite.
Quote from @Michael Sprouls:
Hello everyone, nice to virtually meet you all.
This is my first post on BP, and I write professionally, so I apologize for the longwindedness. A little background: My wife and I have gotten very interested in REI recently. We're learning all we can while simultaneously searching for our first investment (I'm on book 3 of 5 that I picked out to read). We both attended University of Central Florida and lived in a house that my parents bought for my sister and I while we got through college, and the idea of student rentals intrigued us. We both still live in Orlando and are familiar with the UCF area. UCF is now the second largest university in the US with 70,000 or so students, and apartments are springing up everywhere. It seems safe to assume there's a market, but obviously we'll need some more research to confirm that.
We both have degrees in graphic design and work for Universal designing theme parks (with some on-site experience for both of us). I also have an MBA. We feel like this gives us a pretty good background to start, but by no means do we think we know everything we need to yet.
The area around UCF has improved quite a bit in the last 10 years and home prices have risen considerably, but it seems like there are still some promising areas to find deals. We came up with a few questions we've been wondering.
- Of course it's always important to find great deals, but how "great" is necessary for student rentals? I.e. We'd love to buy low and add value, but if the numbers seem to work on a turnkey property, is there a reason not to go that route?
- How risky are student tenants? We were pretty good kids in college, but of course we had parties and made our share of messes. I can handle some college shenanigans, but I'd also love to hear some horror stories if anyone has one.
- What sort of turnover can we expect? The idea of a natural turnover seems more of a benefit than a drawback to me, but I'd love to know some rules of thumb for just how frequent can be expected.
Any other best practices or things to consider are of course welcome. Is there anyone with experience in this niche? Or anyone with experience in Orlando? We'd love to chat any time.
Michael
UCF Grad here now living in Tallahassee with 1 student rental. My student rental is a 3/2 house. I rent by the room and each tenant gets their own lease. I find students to be less risky because I have every one of them use their parents as a Guarantor. I also make the Guarantors go through the screening process (background checks, proof of income, etc.).
Regarding turnover: This depends on whether you have them sign a 1-yr. lease, Semester lease, 10-month lease, etc. If your rental is well priced, in the right location, and you are proactive and responsive, then they will want to stay with you as long as they can. If your rental is in disrepair, you overcharge, and the location is not good, then they will want to leave as soon as the lease is up. If you take in Seniors, then they will graduate within a year and turnover will be high.
If you rent by the room (just like a quad in on-campus housing), then you will generate more revenue than if you treat it like a SFR.
Welcome to the world of investing!
Quote from @Michael Sprouls:
@Will Gaston Yes, I found that thread almost immediately after posting this. Thank you so much for putting that together and for remaining active on this topic! There's a wealth of information in there that has been extremely helpful so far.
I think I read in there that you try to stick with higher quality properties. In your experience, will you buy move-in ready homes or do you always look for a value-add opportunity?
Value-ad.
I can only speak for 1 market, but it's hard to imagine buying a nice, turnkey home near a major state school and the numbers work well in today's market. There are sharpshooters at every school. And those kinds of properties have been snatched up.
- Of course it's always important to find great deals, but how "great" is necessary for student rentals? I.e. We'd love to buy low and add value, but if the numbers seem to work on a turnkey property, is there a reason not to go that route?
Turnkey homes from what I see are still getting sold pretty quickly, you may be better off finding something that needs a little work, or even a duplex that you can fix up. Try offering to multiple duplexes and even calling the owners directly (try calling the ones that have owned 10+ years) and seeing if they will sell to you. I find these are the easiest cold calls to make, but usually they will hit you with a big sticker price at first. Another route is looking at all the listings that have been sitting for a long time and sending an offer that makes sense for you to cash flow with interest rates and rooms/units rented. Use FB marketplace to figure out what you can rent the rooms for.
- How risky are student tenants? We were pretty good kids in college, but of course we had parties and made our share of messes. I can handle some college shenanigans, but I'd also love to hear some horror stories if anyone has one.
I would highly recommend screening very thoroughly and asking questions to see what they're lifestyle is like, theres no need to only get college kids either. I had a roommate like this for my first house hack and she was great at first, but I didn't stay strict on certain rules and things got stretched out more than they should have haha. Of course make sure you are being compliant and letting everyone get screened and not being discriminatory.
- What sort of turnover can we expect? The idea of a natural turnover seems more of a benefit than a drawback to me, but I'd love to know some rules of thumb for just how frequent can be expected.
This would be set by you, you could go the Padsplit route which is company that rents by the week and helps secure tenants, or you can find them yourself through FB marketplace or Zillow and get a lease made and take a deposit.
I would concur that value ad is typically the way to go, particularly in student rentals. But like Will said, markets can vary.
Students, in my opinion, are actually not much riskier than market-rate renters. There are good and there are bad in both marketplaces. To your second part, the one nice thing about student renters is that even when you have bad ones, they leave eventually. I have always liked knowing that there is inherent resolution (them moving out) to most issues.
Turnover can very from market-to-market. Some schools allow students to live off campus all 4 (or more) years. This would give you an opportunity to rent to the same person(s) for a few years. Some schools only allow upperclassmen to live off campus. In this case, you could expect to turn 50% of your units on any given year. As nice as it can be to have stable tenants, we usually feel like the unit(s) need to be extensively turned over if the residents are there 3 or more years. So one could argue "lighter" turns are easier every year or two, versus, extensive turns after a few years.
- How risky are student tenants? We were pretty good kids in college, but of course we had parties and made our share of messes. I can handle some college shenanigans, but I'd also love to hear some horror stories if anyone has one.
- What sort of turnover can we expect? The idea of a natural turnover seems more of a benefit than a drawback to me, but I'd love to know some rules of thumb for just how frequent can be expected.