Thoughts on house hacking in a college area?

Question

I am currently a college student looking to invest in real estate. I have begun to do research, reading books, and listening to podcasts. My plan has been to purchase a single family home semi near campus, hoping to easily appeal to college students. Planning to use the house hacking strategy by living in 1 of the bedrooms and renting the other rooms out to friends for the first year before moving (hoping for a 3 bedroom). The university is the University of South Carolina in Columbia, SC. I am originally from Charleston, SC where the price of homes is astronomical. Prices in Columbia are much more affordable and I can house hack it. Thoughts on buying in a college town and my plan?

Will Gaston · Answer

That's exactly how I got started in 2005.Bought a house in Shandon & rented out the 2 rooms to friends in grad school. I lived for free.If you go this route & want to target students, I'd recommend 29205 & 29201 zip codes.

Ryan Thomson · Answer

House Hacking is amazing. Here are some resources I found really helpful on my journey:1. For podcasts I really like the House Hacking episodes on Bigger Pockets Podcast and other channels. Here is a playlist with the best House Hacking Podcasts I’ve found: https://open.spotify.com/playl...2. Great beginners guide: https://www.biggerpockets.com/...3. The Book on House Hacking Strategies by Bigger Pockets is also a fantastic book4. Happy to talk if you want more advice5. Connect with a realtor who understands house hacking and has invested themselves6. Connect with a lender to see what you qualify for and how you can improve that situation7. Go to local Real Estate meetups and learn from people there

Ryan Thomson · Answer

@Catherine Curtis I love the idea of buying in a college town in a good rental spot for college students. You will always have tenants willing to pay by the bedroom. Renting by the bedroom will help you get more rental income. I wish I was thinking like you in College! Here is an interesting idea. Use your knowledge and drive to convince your parents (or other co-signer) to get a home near your college. Co-sign with them and put some money down with them if you can. Buy it as YOUR primary residence with your parents as the co-signers. This would allow you and your parents to only have to put 3.5-5% down. Then you rent out the rooms to your college friends. This will probably allow you to live for free and your parents to avoid a dorm or expensive home payment while you are in college. Not to mention you can both cash in on appreciation and loan paydown. If you really wanted to scale, you could do this each year. Rent out the last house to a new group and move with your friends to the next house. This is a great way to scale and you only have to put 5% down if its your primary residence each time. You obviously need to convince your parents or (someone who would co-sign and help with the downpayment) about how good of an idea this is. But if they are savvy money people and they trust you (which I bet the do), then this seems very doable. Maybe give them part of the equity or a monthly fee until you refinance and get their co-signing off the loan.

Catherine Curtis · Answer

@Ryan Thomson This was my idea exactly! I have a good credit score and around 10K in savings due to taking a gap year after high-school. I also have good credit history. My only issue would be proof of income due to not working full time during the school year, so I would need that cosigner. My parents are on board with my plan, I am just currently trying to learn as much about house hacking as possible before jumping in blind. I already have a lease signed for next school year so I am taking that time to learn as much as possible and save as much as possible. If you have any recommendations on books, podcasts, or videos I should try out I would love some. Thanks for your reply!

Jim K. · Answer

Sounds like a very good idea, one I was too stupid to have when I was a student. But a word of caution: you may miss an excellent opportunity if you just think in terms of picking a place "near campus." I rent out the other half of my duplex to a doctoral candidate at the University of Pittsburgh and her long-term boyfriend. My home is nowhere near Pitt, but it's an easy commute on major roads to get from here to there.

Account Closed · Answer

Sounds like a great plan! Could be very convenient if you have friends that would be looking to live with you anyways, and it's a win win for all parties. Also, if in a prime location, campus housing is stable demand.

Austin McClain · Answer

I like that plan. I have a house hack near Ohio State University and it has been successful. Make sure the school's financials are fairly strong. It would be a bad situation if the school closed its doors. Some smaller colleges are struggling.

Jimmy Bostic · Answer

Hi Catherine, this sounds like an awesome plan! I wish I was aware of these strategies before I entered college. I myself am looking to house hack after my senior year. I don't know the research that you have done, but I'm curious as to how the Columbia (college) housing market looks. Comparing it to Columbus, I feel like majority of "priority" housing is already taken by private investors or reality companies. I'm curious how far from campus you'll have to expand your search to find something doable/the effect distance will have on potential tenants?Good luck with your endeavors. I hope that you are able to make this work!

Adelola Sokoya · Answer

wish I started at your age, am just trying to get started and I am positive that am going to do well

Chris DeTreville · Answer

Do it! I bought a house after graduating from USC and I still own it as a rental. I wish I had bought it or another one while I was in school. Listen to Will Gaston, the USC student rental guru!