How much luck have you had renting 2/1's?

Question

Hi All,

I am new to real estate, but I am interested in the buy and hold strategy. I'm not looking to get rich, but like most millennials I'm searching for that financial independence.

Back to the question, I'm moving to a new city in Texas for a job very soon. I'm interested in investing in a property I've found. The property is a 2/1 older home in an area just a few blocks from downtown and only 2 miles from the campus of a large university. The property has been recently renovated and looks great and for the price I know I could make a good profit from renting. However, my primary question is how much luck have you all had renting out 2/1's? The amount of money I have to invest is enough to purchase this property, but I don't have enough for the average 3/2 in town. Should I wait until I do have enough to invest in the popular 3/2? Or should I get started now and jump into the 2/1?

A little more background about the area, it is a midsize college town in Texas. Most schools in the city, such as where this house is, are not ranked so high. It does have a growing downtown area. The college is fairly large at around 16,000-17,000 students. Also there are a plethora of 2/1's in the area as it is an older area and many of the houses were built pre-1950's.

Thanks!

Travis Francis · Answer

Hey Cody.  I am a graduate of Baylor and spend several weekends a tear there for sporting events and visiting friends.  I think Derrick Williams' advice is right on the money.  I would also submit to you, if you can close really fast, you can make some money in the short term by listing it on vrbo.  There is way more demand than supply during football season, and there is a surprisingly strong demand on off-football weekends due to the amount of travelers that come to Waco to go to the Magnolia Silos and do the whole "Fixer Upper" tour thing.  Waco has become a get away weekend destination for many people and many businesses are thriving based on that. Might be a good way to generate some cash flow for you while you wait for the next student leasing rush.

P.S. If you do this, let me know and I will rent it from you for the rest of the season! (No hidden agenda for the advice.  I promise)

Good luck buddy and enjoy Waco!

Derrick W. · Answer

I offer both a 6 and a 12.  So far only 6's have been signed. I like the option of offering both. In theory to aim at the college students your lease dates must work around school scheduals.  If you bought a unit today then you have  already missed the big "rush" of students moving in for the summer. Now you either rent to what you can find or hold out a few months until the next big move occurres. By doing a year lease aimed at students you have  already set yourself up for prime rental season next year. At least that's how I understand it. I buy when I can and as a result rent to who I can when ever I can.

Derrick W. · Answer

for what ever reason only half of what I typed was posted!??

I blame the layout of the house more than anything. Bedrooms are on opposite sides but the only bathroom is near the master bed room. Access is through the hall way but walking from the second bed room requires passing through the living room, kitchen then hall way.  I have many people look at it when vacant.  Family's seem to like it best.  It's in a c+ neighborhood but I am surrounded by college students and minuets from a&m and blinn.  It's priced right along with all the surrounding housing. The #1 thing I hear about when showing it is the bathroom situation. It rents out within a week every time it's vacant so in reality it has very little down time. It also cash flows nicely and has never put me in a financial bind.

So basically it turns over a lot and requires more overseeing than anything else I own. However It does pay the mortgage and creates profit.

Cody Meyer · Answer

Wow, that's incredibly helpful. The house I'm looking at is also in a C+ neighborhood. Do you offer both a 6 and 12 month lease? Every rent house I've noticed in Waco has only the 12 month option. I thought about offering both, primarily because I was afraid 12 months would run off any college kids. Then again I'm not sure I want to adhere to that demographic anyways.

Cody Meyer · Answer

So the town I'm speaking about is Waco and Baylor University of course, I'm not sure how similar the Bryan/College Station area is to Waco. If you know anyone in the area Jim I'd really appreciate any type of lead. Derrick, are you mostly renting to college students, singles or small families. Also, you said it's the hardest unit you own, but it does make money, can you elaborate on that?

Thanks for the speedy replies!

Emily Hakala · Answer

hi @Jim Cummings.  I am in a similar situation (newbie moving to Austin), but I'm looking for a duplex/4plex to house hack. I am looking for an agent who knows the area, especially one that understands the real estate investing perspective.  Any referrals you know of would be greatly appreciated. Being new to the game, guidance and education are top priorities, and I'm willing to work for both.

Derrick W. · Answer

I have a 2/1 in a college town. It is by far the hardest unit I own to rent out and keep rented out.  It turns over ever 6 months to a year.  It makes money

Jim Cummings · Answer

Cody

I suggest you contact an Experienced REALTOR (or 2) who deals with Leasing in the city where the property is located. Ask for their take on Renting a 2/1 SFR. Ask to see the "raw" MLS Data for the last 90 - 180 days - not just their verbal summation of the situation.

From your post no indication the property is on the ACTIVE MLS. You might also consider choosing one the Agents to help you buy the property - if that's what you ultimately decide to do! Buying in a Small College Town is an excellent first step.

I'm in the Bryan College Station area and also have 25+ Years experience in the Austin Market. Let me know if I can help you locate an experienced agent in the town of interest.

How much luck have you had renting 2/1's?

Most Popular Reply