student housing pickup

[Jay Borowsky]

Hi,

I've got a potential deal for student housing with a 6BR house in Binghamton, NY for $92k. Each BR will bring in $350-400 once repairs and renovations are completed. The cost of them will be $10-15k. Taxes on the house are approximately are just under $4k. 20% down and finance the rest.

The vacancy rate is almost non existent because the houses fill up quickly on a year to year basis. I know that I should factor in some give here but I honestly don't believe that it is an issue given the demand for offcampus housing by students..

One problem is there has been no price appreciation in this city in years being a suffering rustbelt city. The university up there is planning to expand and it may turn into a college town with appreciation down the road but I can't count on it.

What do you think of this as an investment strictly on a cash flow basis?

Thanks for your advice.

[Carson M.]

@Jay Borowsky

I am currently a student at a big (50,000 kid) university. there is a lot of student housing right off of the main road on campus. A few points I would like to make in hopes of aiding in your decision:

-At my school, it is a dog eat dog fight every October when all the management companies open leases for the following year. Most people looking for a home get boxed out and have to settle for an apartment

-Make sure the home is close to campus. Here, a home a block or two from campus/downtown have rents 1.5-2x the amount than a home 4-5 blocks away. Big difference

-I would not worry about not being able to fill a 6 person home. Sure, there are less 6 person groups looking for homes, but there are a whole lot less 6 person homes available. Even this year, I was looking for a 6 or 7 person home and was not able to find a single one available.

-Even though school is 9 months, every home and apartment here is a 12 month lease. kids either eat the cost, sublease, or live here in the summer

-Parents pay all of housing for almost everyone here. Make the parents co sign and be responsible for payments. Also, a lot of management companies here give a tiny discount for paying 3 or 4 times a year, that way kids don't need their parents to send a check up 12x. easier on everyone

-Every single property here tacts on a $200-500 cleaning fee for the end of the year.

If I can help clear anything up from a students perspective that has gone through the process, please let me know. Carson