Student rental purchase in the Hudson Valley, NY

[Carl C.]

Since I see such detailed posts on deal I thought I'd share my first. My partner and I bought a 4 bedroom SFH in October 2013 for $145,000 with conventional financing, 25% down. It was a FSBO deal from the estate of the former owner. Unfortunately the former owner was the type who thought he could fix everything himself and it is clear that he really didn't know what he was doing. We put about $25k into rehab including a new roof, electrical work, plumbing work, retaining wall repairs, and gutting the second floor down to the studs to reframe some walls. I have a background in home repairs and contracting so I was able to do a lot of the work myself but bills still add up. That said, we had a good idea about what we were getting into.

We wanted to rent to students in the area so getting it rented took some time because we needed to align with the semesters. We rented the house for $2,500 per month and our monthly PITI is right around $1,400. For now we are paying everything out of pocket and setting aside all rent income for the next down payment. It's amazing how quickly that can add up but until I figure out some creative financing I need every penny I can get.

Owning the house has certainly been a learning experience and a lot of work. What is great is that I love it. This doesn't feel like work for me even when I'm trudging up there to snake a drain. Now I'm on the look out for deal number 2!

[Carl C.]

@Karen Margrave  Thanks for the welcome! I rent to a group of friends. The school nearby has a pretty severe shortage of housing and they have a website for landlords to advertise their houses on. We were stunned by the number of calls we got about the house. These guys are juniors and they will be staying with us next year as well. One of them has a sister who is a freshman and her dad has said that as long as their are no troubles with the house he's likely to have her rent with us when his son moves out.

@Ryan Bergeron  I started thinking about this when i was a student as well. I did a little math about what we were paying and realized my landlord was getting way more than market rates by far. He owned several houses and worked for himself. It became a no-brainer. The trickiest thing for us (and this may be different in different markets) is the ability to get a property in the right neighborhood. When a decent house comes up, there are several investors who will snap the property up. Most investors where I am will not buy a house unless they can get 5 bedrooms out of it. We did the math and found that 4 bedrooms would give us acceptable cashflow. Keep in mind that we are 6 months into our first lease so issues that we have had will evolve but your number one problem should be finding the right tenants. When we were interviewing potential tenants there were some groups that gave me a very bad feeling. What kind of attitude do they walk in with. The group we went with was actually the second group to view the house (the first group had a friend back out and so they couldn't sign the leases). They were extremely polite and we had a good feeling about the parents (who are all co-signers) when we spoke with them. We did as much research on them as we could find (thank you google). Rent gets paid on time every month and problems have been relatively minor. The biggest problem is this is the first time any of these guys have lived on their own. They just don't know anything because their parents or the school took care of everything in the past. They don't know that a running toilet is a problem. They aren't great about putting the garbage out. They didn't know when sewage backed up in the basement. The house is just generally messy (not surprising). The neighbors called me one day and said they had a lot of people over and someone parked on their lawn. It's a lot of hand holding and teaching the guys what's acceptable and what isn't. Still totally worth it so far, that's why we are looking for our next place.