Penmoken Park house in Lexington, KY

[Emily Beatty]

Investment Info:

Purchase price: $212,000
Cash invested: $53,000

Single Family Home across from University of Kentucky. 5 BR rented to college students for 475 / room

What made you interested in investing in this type of deal?

The college and strong rental market. Nearby Central Baptist hospital.

How did you find this deal and how did you negotiate it?

Walking by. Was actually looking at another property a few doors down that needed more work / rehab. Listed at 239,000. It was on the market for a few months. I was not interested originally because of the price tag, didn't think the seller would negotiate as much as they did. Space was much larger in person than what appeared on the listing. We offered 205K and settled at 212K. Appraised for 235K.

How did you finance this deal?

Hard money lending 25% down through LLC.

How did you add value to the deal?

Offering to close within ten calendar days. Having my lender ready to go, money ready to go. Title attorney ready to go. Proof of funds. History of closing fast.

What was the outcome?

We own the property!

Lessons learned? Challenges?

Closed the deal 2 weeks before the school year began. Missed the ideal rental time to get students in for the school year and get the rental going strongly. Losing a few months of rent.

[Jason Turgeon]

I wouldn't want to be in the business of furnished rentals for college kids. They aren't going to take care of your stuff and you'll have headaches. Here in Boston where we have literally hundreds of thousands of college kids living off campus, rentals are almost never furnished. The kids are smart enough to get into college, they'll be smart enough to figure out their own furniture. 

As for the historic district, they're a PIA from an owner's perspective. You have to get permission to do things to the exterior. The big ones are replacing windows (historic district people go absolutely insane for old-style single pane windows), replacing roofs and siding, and doing any kind of addition. But there can also be stuff like paint colors.  But on the plus side, all these restrictions limit new development and can make the neighborhood more desirable. Constant supply + increasing demand = appreciating house prices and increasing rents. So you might not want to fight too hard if you aren't planning on putting in cheap windows or ugly vinyl siding anytime soon. Make your house look like a historic gem and reap the benefits in a few years.