can it be done?

Question

situation: I have found a university town with a student pop at around 18,000. there is a shortage of housing of about 3,000. there is such a shortage that students are getting extended stays at the nearby holiday inn. I have found a 65 acre plot of land in the area for 5mil. I have no developing experience but I have a vision, a group of sponsors in NY with loads of cash and a goal to make a ton of money that is almost guaranteed given the prospectus. If I have the financial backing and team up with a group of experienced developers in that area can this be a realized dream? The goal for me would be to obtain the land and then build 50-60 units at first and then gradually expand. I want to be the liason between the investors and the construction but if I have little experience in that field how do I not get taken advantage of in the budget- do I reward partial ownership for efficiency on their part? the exit plan is that there isnt one. I would like to build this complex up and hold onto it for the long haul collecting rents that would be awesome to any investor. thanks for any input.

Rich Weese · Answer

Many years ago, I had student housing in Provo, Utah and Flagstaff, AZ. They were both a MAJOR pain in the butt. Summers were a problem, boy-girl was a problem, winters were a problem, etc. You'll earn every penney you make. Some colleges are going to be hurt in this economy, attendance will drop and some will actually close. I also owned 42 units in Asland, Ore. When student loans were discontinued, I lost 50% of my occupants. Lots of things to consider, imo.

Joe Cline · Answer

Sounds like UConn. When I went there off campus was packed and so were all the campus dorms. The leases are a year so if you want an apartment you deal and sublease or live there during the summer.

Dave P. · Answer

"Tread carefully" is million dollar advice David- how much do you charge for your consulting?

Local politics can carry the day on projects like this.

PM me if you would like to speak on the phone.

Matt DuSold · Answer

Summers may get a little thin for the students. One way to draw students there is having a Pool. The best complex here is probably about half full during summer, but most students who aren't locked in a lease chose it over others because it has a nice pool a few basketball courts and a few volleyball courts. Also, tanning beds are something to consider as well.

As for winter I wouldn't worry about that at all. You can get a lot of year long leases if you have the right perks to attract people in the summer, and at worst case you do 9 month leases(Aug-May). More and more people are starting to stay over winter break for work or J-term.

Bob McIntosh · Answer

There are a number of aspects you need to consider when thinking about planning a project of this magnitude.

1. You need to determine what is the competition?  What off campus housing already exists, what are their rents, tenants like, etc...  get to know everything about who else is renting to students.

2. You need to contact the college and find out if they would be willing to partner with you on solving the housing problem.  The college I attended did a similar project and hired out the development of almost 400 units to a known and respected developer from the area (this could be a critical component... he was known and very well established).  If they seem open to it that would be the best way to proceed as they can help you in all sorts of ways you never thought about.

3. You will need some serious Cash to do this and have staying power.  The one down fall about student housing is that while you are booming and raking in cash during School what happens when Summer comes and the majority goes home?  You suddenly have a severe shortage in prospective tenants.  (keep in mind that many students will not want to rent yearly because they are home for 2-3 months every summer, and in some cases a month or more during christmas/new years).

Those are just some quick things that I can think of off the top of my head...  There is however some amazing potential in the student housing market....  I know you are in the NY area as am I, I would interested to know where your prospective area would be and possibly help you out :)  Feel free to message me...

Rick Tripp · Answer

First stop would be your local planning department. Will they let you do what you want to do? Doesn't sound like a quick project, do you have the resources to hang in there during development? That's how people get "taken advantage of in the budget". What do you bring to the table other than the introduction?

Dave P. · Answer

thanks for any input.

Tread carefully. That's all I really have to say.

Matt DuSold · Answer

I don't know what the university town you are in is like, but here at Mizzou they admitted 4,000 more Freshman then they should have (I don't really know how you do that either). So many of the Freshman are living in apartment complexes off campus that the university paid for for the year.

Because of the over population and growth of Columbia the city is helping people fund apartments in our downtown area and such. So you may want to look into that. You could strike gold and make it happen relatively cheap. The situation you're in is the same situation here and is what is making me want to stay here after school.

I know I didn't answer your question very well but figure a little input is better than none...