Is student housing worth it? I think so!!

[Matt McCourry]

K pasa multi family investors!

So after diligently searching the Myrtle Beach SC area for a decent deal I finally came across one in the most unlikely of places....

I analyzed and visited 12 properties before finally circling back to a listing my agent had compiled and put at the very bottom of my multi-family housing search.  

This small community about 20 or so duplex's are strictly student housing.  And when I went to Coastal Carolina University, they were party central.  I mean, it was like spring break in Cancun every Tuesday, Thursday, Friday, and Saturday.  WILD!

Why did I choose it? I was riding around one morning after finishing up completing a wholesale on a SFH when I decided to cruise through the area. I came upon a kid sitting on the patio out front and asked him what he paid for the place each month? His replied "bout $500 bucks dude"

Me, "really?  For the whole side?"

College dude, "naaa man, I wish, thats what I pay for my room"

Me (to myself) "holy smokes!"

College dude, "Yaa its sweet bro, its a steal compared to what my other buddies are paying for crappy rooms in Campus Walk (a huge student housing complex).

After hearing this, I had to take a closer look!

So here are the numbers for both sides per year:

Purchase price: $230K

GSR: $35,640

Repairs and Maintenance: $2915

Utilities: $3265 

Taxes: $2220

Insurance: $2500

MGMT Fees (although I am tackling this myself): $2851

Replacement Reserve: $1000 (for replacement of appliances 

NOI: $19,463

Expected Monthly Cash Flow: $450

Of course I wish I would have gotten it for less, but with an average vacancy rate in this small community running around 4% or lower for the past decade, and with comps' based on the same product selling for $256k, $249k, & $272k, I thought it was a good buy.

Please guys let me know what you think!  All comments are welcome!  Here to learn.