Newbie interested in student rentals

[Lauren Myers]

Hi! I'm Lauren from Seattle, and I want to own student rentals. I'm absolutely new to real estate investing, but I stumbled on BP and here I am!

I went to school in Tacoma and ever since I haven't been able to put aside the idea of renting to students there, and hiring a student to manage the properties. I'm very adamant that students deserve the best rental experience possible - oftentimes their first - and that providing information and reliable and ethical property management is just as important as the roof over their head. I want to hire a student to manage both so I have someone on-site, but more importantly to give experience and income to current students. My school gave me a lot, and I want to give back.

In addition to that, I live with a group of friends, and we are talking about buying at least one property together - first the house we live in, then we'll see how that goes. 

I haven't done keyword searches for either of them yet, since the first page of blog entries was enough to convince me to sign up. I always take recommendations, though, especially on hiring and training students as property managers and buying as a group.

Excited to be here! Cheers,

[Roy N.]

@Lauren Myers 

Tacoma is a nice area, I have distant family (Tebb) in the lumber industry there, whom I visited a few times when in the area with the RCN.  

We are located directly across the continent from you (literally - the latitude is almost the same) and a country away, but are also in a university town and have several student rentals: apartments, houses, rooming houses.

We share your sentiment that students merit decent housing (clean, safe, energy efficient) and that is what we provide.   As you move further along in this venture, I'd be happy to answer questions (the best I can) and provide any bits of experience which may be useful.

Reading your initial post, I have to words of caution to a couple of the ideas expressed:

We have on-site "den mothers/fathers" in our rooming houses which, in my view, are essential to smooth operation of the property.  The gesture of hiring a student for this role is commendable, but in my experience not practical.  The first challenge will be finding a student who is mature, organized, and responsible enough to fill the role.  Once you do, she {I say she, as there is a far higher probability of finding a responsible woman of that age than a man} will face the challenge of exerting any authority over the other housemates.  This model works fine with proctors in dormitories, because the proctor is seen as the spokesperson for the university who holds a lot of leverage over the other students.  As a spokesperson for you, the "stick" will not be there to enforce the rules.

We have found it works best of your Den mother/father is someone a few years older than the students - a recently graduated young professional or, perhaps, a mature graduate student.  It also should be someone you can trust.   If you a buying the property as a group of friends, perhaps one of you lives on-site as the den mother?

The second caution is with respect to:

Believe me when I tell you that *all* partnerships end - marriage, business, performance, will all cease at some point in the future.   How they end - e.g. messy or civilly - depends on how they were started.   While you are all friends living together now {sounds like a 90's sitcom}, your lives will change and each of you will follow your own path.  Before purchasing any property together, pool a few hundred dollars, find yourself a business/real estate attorney, and have a formal and detailed partnership agreement drawn-up.   The agreement should address the initial participation of each member (i.e who contributes what money and which skills); the ongoing responsibilities of each member;  procedures for exit of any of the members (both by choice and with a push) - e.g. to whom may they sell their interest, who has first right to purchase the interest, etc.

You may likely think such a formal agreement an unnecessary expense at this point and an activity which may put tension on the bonds of friendship.  However, a few hundred dollars now, could save thousands down the road and, more importantly, keep the ties of friendship in-tact at an emotionally charged time.