Student Housing - Analysis Help.

[Robert Freeborn]

Hi BP. 

I'm looking at several apartment buildings for sale in Idaho next to a major university. I received some initial information about a complex, and I'm trying to decide it is worth a second look.

It is an 12 unit building, 11 are rentals and 1 is a live in manger required by the university. The asking price is 1.25 mil. NOI for last year was 70,000. After mortgage service, with 25% down, yearly profit is 16,300. This comes out to $131 a unit per month (not including the managers unit).

The university has 3 semesters a year, and a 7 week summer term. Students are required to live in approved housing. The university has just announced some expansion. The property is located, literally, across the street from the campus core.  It is an older building, 1968, but has been kept up. The owner is renovating the kitchens this summer, and expects to raise rents by $50 a student per semester. The building has 4 students in each unit, 2 per room.

I've seen numerous times on this site that many investors want to see $100 per unit per month for their investments. This seems like a lot of money to tie up for a low profit. But maybe i'm too inexperienced to realize a good deal when I see one.

My question is, does this look like it has potential? Is it worth the time getting more information?  (Paying it is an entirely other issue.  However, the owner is willing to have someone assume the loan (if his loan permits.), but I'd likely have to get a partner for the down payment, or just wholesale it to someone.)  Any and all advice offered would be welcomed and appreciated.