Insurance - College Rental Units

[John Romero]

There's a single family house i'm considering to purchase and rent out to college students. It's in a great area, and i'm trying to get ALL the pieces of the puzzle together (mortgage, insurance, down payment, utility costs, emergency fund, profit, etc), then sit down and form a conclusion if it's a smart investment before any money is laid out.

I recently spoke with an insurance agent and he told me that a college house harboring 4 unrelated persons is classified as a "boarding house" and falls under a high risk category. The cost to insure a non-tenant occupied single family house worth $150k would cost approx $800 in NJ. The same house if student occupied (1 student per bedroom, 4br total) would be around $4200 for the year!

Nothing's ever easy! lol

For those who have experience with college rentals, do you have any advice? I want everything to be legal. How were you able to make money with the added costs associated with the property?