Buying Multi Family in college town...after school has started...

[Anthony Wick]

Location: Ames, Iowa

Property: 4 plex multi family, about 2 miles from Iowa State University

My overall question is, how hard is a rental to fill after college has started in Ames? I hear the sales market comes crashing down in winter, but there are clearly other people besides students that need rental housing. 3 of the units are rented through July 2019. 1 unit is vacant.

Unit 1: 2/1, rented at $725. Basement unit 1,064 sq ft, updated in 2016.

Unit 2: Efficiency, rented at $575. No work to do here either. 

Unit 3: 2/1, 1,212 sq ft, rented at $500 to long term tenant. Yes, $500! Tenant also takes care of lawn, garden, and shovels snow in winter. But...$500! Rents would need to go up significantly, and probably $2-3k to turn over apartment at end of lease. Updates would include paint, flooring, ceiling tiles (I still need to see whats up there behind this false ceiling). 

Unit 4: 2/1. Vacant. Needs cosmetic updates to rent out. New carpeting already. Not sure why they started with that update. This would be an October rental, so probably not a student rental? 

Newer updates including a steel roof, metal siding, furnace, hot water heater, some windows, and appliances all within 2-4 years. Landlord pays utilities to the tune of about $230 a month for building (water, gas, garbage). There is also a detached two stall garage that is not being used, which could be updated with a garage door opener and rented out to tenants, or anybody that wants to rent it. 

Anyway, we are in negotiations. Wish me luck and/or advice if you have any for the Ames, Iowa area. 

[Anna Watkins]

Are the other 3 units rented to students or "regulars?"  You have one long-term tenant, presumably not a student, so at 2 miles from campus the property must attract more than just students.  October isn't deal-killer weather yet, even in Iowa!

Especially at public universities, there is always a smaller group of students starting in January, or coming back from a semester away.  A 2/1 isn't too big for one graduate student, so you're not looking for, say, a group of 5 to move in all at once, just one or a couple.

Start advertising the vacant unit the very first second possible, to get the tax advantages for 2018 and maximize your possibilities.  If it's a great unit, you might find someone willing to sleep on a buddy's couch for 2 weeks in order to get the lease.  This worked out for me -- a student wanted one of my houses for the school year, but the previous tenant wasn't leaving until 3 weeks after classes started.  She rented a bedsitter (1 room with half bath) off my brother's office for those 3 weeks, and hung out with friends until she could move into the house.