Can i do it? Should i rent to college kids? What would you do?

[Audrey Raines]

Hello new friends!  I’m completely new at all of this and I need some direction because my ADD brain can’t decide which way to go and quite frankly I’m exhausted from thinking about every avenue of possibility.  I'm hoping that I might have what it takes to be a landlord for the first time! Lots of background info (probably too much) and a few questions will be sprinkled throughout this diatribe, just hang in there with me!

I own my home which was built in the late 1890’s. Great character, approx. 2500 sq ft, 9’ ceilings, 3 bedrooms, 2 full baths, updates made to all the major things (electrical wiring, furnace/water heater, windows etc) and the location is within walking distance to the train station, international airport and a college campus.

The town is old, the oldest in the county, and it shows. The street that I live on is kind of what I would consider “the other side of the tracks” but it was in my price range at the time I bought it as a 20-something with two little kids.  Luckily, the town has been getting updated as the college expands and I am certain my property value will increase, so I obviously want to keep it.

I am considering renting to college kids (everyone I’ve talked to about this rolls their eyes at this point) but we’re talking about kids from affluent families for the most part. This isn’t the rowdy kind of college town. Obviously screening tenants carefully, looking for high GPA’s and having parents as co-signers are of the utmost importance should I venture down this road.  My biggest concern is: do the numbers make sense?

Mortgage was taken out in 2009 for $100k at 5% with a current balance of $82k.  Approx $3k in taxes escrowed in so my current payment is 880/month.  I need to refi my mortgage to remove the ex-husband’s name from the deed….so those numbers will fluctuate a bit.  Wondering what best option is for refi through my credit union – is there a best time of year?

The comps in my area that are already renting to college students charge approx. $500-$550 per student with everything included.  My average on those utilities (water/sewage/trash/electric/gas/wifi/cable) are $550/month (for myself and 2 kids).  As is stands, the current numbers (without considering the refi) mortgage + utilities = $1430.

If I rent 3 bedrooms at 550 each (1650) minus my current expenses (1430) my net gain would be about $220. That’s obviously not incorporating the unknown factors of being a landlord that are completely foreign to me.  At this time I am not looking to have a PM and will be handling it myself.  Side note: the master bedroom is enormous with a large walk in closet – wondering if two could share that space for more rental income.

Prior to any of this happening, I would need to invest some money into good vinyl flooring for the bathrooms and kitchen, some patchwork to horsehair plaster (this stuff is the worst!) and some minor cosmetic updates. I also have a great big attic that could be potentially turned into a 4th bedroom depending on what code requirements it would need. However, that would likely wait until I have one year under my belt. I’m staying cognizant of the fact that these are young adults and things will take a beating so I don’t want to put too much money in anything that is likely to get any more damaged than what my own two have done.

I’m also assuming that an accountant will be needed to make sure that I have myself prepared for tax time and covering myself against any legal issues. Is there pertinent info that I need to ask when looking for the right accountant?

Okay.. I think that’s enough information for now.  So … if this were you, what would you do?