College Student Rentals VS. House-hacking

[Jason Scharf]

So here’s my question,

I am currently working with an agent to acquire my first investment property. The objective is to house-hack to begin my real estate investment venture. So, I am set up with an auto-alert system for every small multi-family in my area to be sent to me. Using the 50% rule to weed out listings, there are slim pickings to say the least. However, I have been getting some alerts with extremely high listed rents which are not indicative of the rent rates in the area I live in (Syracuse, New York area). These listings are posted as having rents like $1,500 for a 3 bedroom in a low priced home (very high rent for my area) but are located near colleges (in particular SUNY Oswego & Syracuse U.). I’m assuming that the rents are inflated because they are counting on college students renting out each room and splitting the cost.

My question is, would going into the college student rental market possibly be a better way to begin this venture opposed to house-hacking? Here’s an example of the latest alert I was just sent which is presumably a SUNY Oswego off-campus home for students:

2 unit home with Asking Price of 75K and taxes of $2,409

One floor 4 bedroom Rent - $1,350

One floor 3 bedroom Rent - $1,500

= Total Gross Rent of $2,850

Using the 50% rule, assuming nothing down and insurance of $1,000 per year with a 6% interest rate, the Net Income is, $691 p/month. I mean come on!!! What’s the catch? If it were this easy everyone would be doing it and clearly this may be too good to be true. I guess my question is, when I’m sent listings that show apparent “fair market rent” with just an average joe living in the units vs. “college student rental listings” with multiple students living in the units, how can I ascertain the validity of these numbers?? Maybe tapping into the college rental game would be a better way to go?????

As always, thank you BP community!