4x4 student rental in College Station

[Annchen Knodt]

Investment Info:

Single-family residence buy & hold investment in College Station.

Purchase price: $165,000

Contributors:
Tom Knodt

Relatively new (2008 build) 4 bed, 4 bath SFR that we are currently renting to students, about 15 min from Texas A&M. Cashflow and ROI are currently below our target, but we purchased it since we were able to get it at below market value and were advised that we would be able to raise rents (we have not yet been able to get as much as we originally thought).

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

We wanted to pick up rentals in College Station since the market is strong there with Texas A&M's continued growth. Further, it's not far from where my partners (/parents :-) live in Brenham, so it's easy for them to be the boots on the ground. We also liked that the house is positioned to work well as a student rental, but also for families.

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

MLS, was being sold by an out-of-state landlord. We negotiated a lower price based on below-market rents and sub-optimal lease terms.

How did you finance this deal?

Conventional loan

How did you add value to the deal?

The primary value was recognizing the potential to negotiate a considerably lower price on the purchase for built-in equity. We have also made some cosmetic improvements, fostered a better relationship with the tenants than their previous out-of-state landlord, and raised the rents closer to market value.

What was the outcome?

We will continue to hold and hopefully continue to get rents up.

Lessons learned? Challenges?

We have been learning more about the rent trends in College Station. Many areas of the market are saturated, preventing much room for rent growth. This plus the competitive housing market can make it difficult to find a cash-flowing rental with good returns.