Student rental houses in Ft Collins?

Question

My daughter is a freshman at CSU.  I live in San Antonio.   I threw out the idea of maybe buying a house for her to live in next year and having her rent out the extra rooms to cover the mortgage.  Now she's really interested.  Does anyone have experience with student rentals in Fort Collins?  Is  there a way to make this economically worthwhile versus renting an apartment?  It appears that Fort Collins is restrictive in occupancy rules with their U+2 rules.  Any advice is appreciated.  Thanks

Jeff Metzger · Answer

Hi Kathy,

Interesting that i found this topic, i speak about this with my parents fairly often.  I am a CSU grad and rented properties all throughout my time at the university.  After college i became very interested in real estate investing and purchased my first property in Fort Collins earlier this year.  Now that i am more aware of the market and investment opportunities i look back a wonder how my family could afford to NOT purchasing a property in Fort Collins especially considering that Myself, my 2 brother and 2 cousins all attended CSU around the same time period.  The money we spent on rent could have easily paid a mortgage, especially back in 09 when i started college and property was dirt cheap compared to now.

The you+2 law has changed thing a bit and i have geared toward 3 person occupancy properties for my immediate future purchase options.  Things are more expensive now, but i feel there is still money to made, especially long term as it seems that about a 1000 people day(probably exaggerated) move to Fort Collins.

If you have any specific questions, feel free to PM me, i hope i can be of some help

Bob Vollmer · Answer

Hi Cathy,

As both a CSU grad and a real estate professional, I can tell you that the U+2 rule does make things more complicated in regards to housing. That being said, it is definitely doable. With the holidays approaching, now is a great time to start looking for a property that would meet your daughters needs. The big question is, are you looking for a SFR, condo or townhouse? A few friends parents did this when I was still at CSU and it has definitely paid off for them. Especially since they had a couple children live in the home over the years. However, they did buy during a slower market. But like in any market, a smart purchase is what makes the deal.

Another great aspect of this is approach is that it teaches responsibility. It is a good intro to being a "landlord" and helps prepare students for the "real world". As I'm sure you know, another great thing about Fort Collins is that most parts of town have easy access to CSU and there are tons of options with student housing.

As far as being economically worthwhile, rents have been skyrocketing all over Northern Colorado. Fort Collins alone has seen a tremendous rise in rental rates. Appreciation has also been playing a large role in housing prices in Fort Collins. If you plan on financing, rates are still low. However, CO has seen a new rule go into place that can put back closing dates.

There are a lot of variables to factor in when making this type of decision. It's important to remember that it is a COLLEGE HOUSE. Parents often take the approach of "only the best for my child", which can mess up the numbers in a hurry. Let's face it, a college home doesn't need granite countertops, hardwood floors and vaulted ceilings. how long would plan on keeping the house?

Sorry for the long, drawn out speech here, but i just want to emphasize how important it is to view a decision like this from all angles. Long story short, I think it's a great idea. And if your daughter wants to stay in FOCO after school, even better.

If you want to talk about this a little more, feel free to give me a call. I've been in the Fort for some time and can help shed some light on the topic. (970) 988-4927

Adam Christopher Zaleski · Answer

I have had a single family home rental in Fort Collins since 2007 and I have been very pleased. However, 2007 was a very slow market and there were lots of deals. I think the market is much different today.

The longer you hold onto the property, the more it would make sense. If you plan on selling after your kid graduates, it would be very difficult to make money.

I know that people who bought 3 years ago will probably make money because there has been massive appreciation over the last 3 years. However, I think it would be overly optimistic to expect the same massive appreciation for the next 3 years.

Patrick Liska · Answer

@Peter Schuyler, know she was not, i did it all wrong, unfortunately. she did get a PA drivers license and had some bills and magazine subscriptions go to the house for her, but it was not enough. main thing is to have it set up so the tuition bills go to the house to them and have them pay for that ( even if it comes from you ). have all bills for the house go to them as well, make it look like they are completely independent of you.

Peter Schuyler · Answer

So your daughter could not claim residency because you claimed her on your taxes as a dependent?  Was she paying for her college costs also?

Patrick Liska · Answer

@Peter Schuyler i would add that you can not claim your child on your taxes either during those years, i was denied residency when my daughter went to college because of that ( PA ). you need to show that your child is completely paying for it and is completely independent from you. my first investment property was just this scenario and now have 2 student rentals plus a few regular rentals in the same town. I love student rentals, but need to look at other college towns, recent changes to school policies hurt the rentals in town, so be aware of things the college is doing at all times with their housing.

Peter Schuyler · Answer

Im not sure this is true, but my lawyer suggested the following to help ease out of state tuition for my daughter.  Here is my setup, comments welcome.

• My wife and I live in Texas, we use to live in Colorado years 1997-2007 in Parker, CO
• My Daughter will be attending CSU Fall 2017 and plans on staying in Colorado for the foreseeable future, she wants to live and work there but can not support her self while in College.
• I buy a small house in FOCO or Loveland for my daughter using my credit, my down payment, 2-3 bedroom max.  She is not the party type, but I know the risks are there.
• Put the house title in my daughters name and have her claim the income on her Colorado State Taxes, she owns the property and generating income as a resident and taxable at her tax rate (smallest).
• She switches her Drivers license and Car Insurance to Colorado, she is now a resident with an income property she can live in years 2-4 after one year in the dorms.
• The wore case is CSU does not grant her residency and she offsets the cost of living during years 2-4 with the rental income and has a place to stay.

I think Im missing something, and would love to know if anything has done this, Parents out of state, child claimed as in state, etc.

Pete

Braden Hobbs · Answer

@Peter Schuyler

U+2 is yourself and 2 unrelated people in a single family home.

Kyle Blake · Answer

You're going to be paying a high premium to buy in Fort Collins right now, and really rolling the dice on roommates. I looked at two properties this summer that were for sale that were trashed inside and out. Both were bought by parents for their kids, who brought in roommates and turned it into a party house. Both only lasted a year before they were put up for sale and put their kids in an apartment. So you're rolling the dice on who will come in and out of that house.

Peter Schuyler · Answer

Sorry, Im out of state, and my daughter is trying to get into CSU as a freshman also next fall.  If she goes Im tempted to buy a small SFH and let her rent starting her sophomore year.  Can someone local explain the U+2 rules for me, if I own the property and live out of state, what are the rules?  Thanks for any help.

Student rental houses in Ft Collins?

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