First Deal: SFR or Student Rental?? - Brainstorming

[Julie Kern]

We have a contract on our first deal as of today (see http://www.biggerpockets.com/forums/88/topics/1548... for details).

Our original plan was to rent this out as a SFR. But over the last 24 hours, I started wondering if we should consider positioning this property as a student rental. The house is a 3/2 that is 2.5 miles from Kennesaw State University (third-largest university in Georgia and one of the fastest growing). I have read some threads here on BP about student rentals and I'm aware there are pro's and con's.

I've been brainstorming ideas about this and thought I would turn to the BP community for help.  Here are a few of my thoughts/questions.  Please jump in with any advice, opinions, etc.

• Rent by the room (individual lease) - pros/cons?
• If we rent by the room how should we expect a PM to charge fees - based on total rent of all rooms at 100% occupancy, or by the room?  Obviously, the latter would be preferred but I'm not sure of standard practice - or is it negotiable?
• New Non-university student housing (off campus) for a 3 bed/3bath apartment rents for $650 - $680 PER tenant.  This includes a fully furnished apartment with flat screen TV, sofa/love seat, full kitchen with upgrades, desk/bed in each room with walk-in closets in each room.  Also includes a shuttle to/from KSU, a large swimming pool and a big social scene.  However, having toured one of these with my daughter who goes to the university, they are already in ROUGH shape and are only a few years old.  Management seems to be non-existent and the apartments are party-central, which was big reason we ended up going with a regular apartment for my daughter and her roommate.  These apartments are basically unsupervised dorms.
• Given the above - to what extent might we model our rental after these apartments - provide some furniture (sofa, love seat, kitchen table), include utilities, TV, etc.?  One appealing aspect of these apartments when we considered them is that they were move in ready and we could sign individual leases.  The negative was that they had horrible reviews online because of the way they are managed, and it was evident from seeing them in person that the reviews were dead-on.
• Any input on what to charge per room, if we end up going that route?  One room is a master with bath.  The other two rooms/tenants would share the 2nd bathroom (where the washer/dryer is currently located - could be an issue).
• Co-ed or single sex?  Or do we run in to any fair housing issues if we specify a single gender?
• City ordinances/codes etc? There is no HOA so that wouldn't be a concern.

I would love to hear feedback.  We are meeting with the contractor tomorrow and how we position this rental could impact our rehab decisions.

[Rachelle S.]

Hi Julie, 

I have a house in Kennesaw that is 4 miles from the school and I was planning on doing the student housing idea. Mine is a 2bd/2bath with a common area/kitchen/laundry along with an upstairs loft. As a recent Kennesaw State grad, it seemed like the ideal situation for student housing. As for the distance from campus, I wouldn't worry about it at all. Since KSU has always been a commuter school, most students drive, which is why there are now those multiple decks and shuttle services. It is a little different than a traditional college campus and most students have vehicles, especially with most working part or full time.

That being said, I never even got to list my place before it was picked up from word of mouth. It was rented as a SFH but priced as if it were "by the room" by 2 young men who work full time. I have learned a lot from this rental and since they are the ages of college students, I have a few words of advice.

Most students and young people do not have the equipment nor any desire to do yard work. HOA provides the lawn maintenance for the front lawn and I include lawn care for the back in my rent price. I also provide a washer and dryer for the home which they "rent" and pay with their rent each month. They jumped at the opportunity to rent the washer/dryer from me.

Also, don't over rehab with renting to a younger demographic. They could care less about granite, stainless steel, etc. Mine just want everything to work.

I offered a 12 month lease and the clause that if they stay and re-sign 60 days prior to their lease ending, the rent won't increase. If they don't, it becomes a month to month at a higher rate. After reviewing that clause, they said they were going to be sure to re-sign to avoid an increase.  

For payment, I opened a Bank of America account and got a deposit only card for them. Because they each wanted to pay half to me (all cash) at their own pace, this was the easiest thing to do. They can deposit their portions whenever they want at the local branch, (<.1 mile away) on their own schedule and I just check to be sure it is all there by the due date. This gives them a receipt for cash deposit, and me not traveling to pick it up or having to worry about a cash payment and disputes.

Finally, I sat down with them to review the lease, read every paragraph, had them initial every page and answered all questions and discussed my expectations so they knew exactly what they were in for. So far, so good. No late payments and the place is always in great condition when I do a check up (quarterly). 

Good luck and no matter which approach you use, I know you will have it rented quickly. You may end up with students or families because of how desirable the area is.

Rachelle