All Forum Posts by: Austin Jones

Can do.  

Investment is a 50/50 partnership with a friend, hence why my down payment (which will include $ towards closing costs, etc) is only $25K:

- List Price - $175,000

- 4BR/1BA student rental in area where rents will be between $1900-$2400 for a 4BR. 

- Taxes - $2789/yr

- Insurance - $1200/yr

- Property Manager - 7% of rent, plus $100 tenant placement fee.

- Property doesn't need any major work done(new roof, flooring, appliances), though a second bathroom would put it at the top end of the rent range.  This is on our radar.  

Anything other details that might help?

I'm looking into buying a student rental property.  I have a family member offering to front me the $25,000 down payment.  I have the money in savings, but also have a young family and this feels like a good opportunity to leverage.  I'm curious how you guys would structure this transaction.  My initial thought is:

7-10% annual dividend plus lump sum repayment of principal in 3 years.  

Obviously the property won't cash flow enough to cover this principal repayment in 3 years, but it does give me a chance to extend the savings window to get into the REI game while taking advantage of a generous offer while it's in front of me. To reiterate, I do have the money saved up and worse case scenario could pull it out to repay him.

Is there any reason to not do this?  Is 7-10% too generous of an offer? I'm open to all options!

Thanks!

Get an FHA loan at 3.5% down for your first house. Keep it as your primary residence for the requisite amount of time while you save up the 20% down for your next property. When you buy that first house, make sure it checks the boxes you'd want as a rental property so that you get your cash flow. After that it becomes a leverage and refinance dance to get to your goals. Good luck!

Quick background: I'm partnering with a close friend to buy our first investment property, a student rental house near a major university.  We've done our research and know what neighborhood we want to invest in, realistic rents, expenses, etc.  This has provided us a good basis for what we want to spend on a house to make sure we are hitting our cash flow goals/equity dividend requirements.  We know our numbers.  

We've organized an LLC, but are still waiting on the state to finalize it so we can open a business bank account. While we're waiting, we've been talking strategy on how to best find a property. I've been assuming we'd try to get a good deal on a property not currently for sale using direct mail to contact absentee owners in our target neighborhood.

While looking at properties that currently ARE for sale, a new listing popped up that we feel is underpriced, cash-flowing and essentially checking all of our boxes.  Because of this, we don't anticipate it sitting on the market for long, and we'd probably need to move sooner than later on this property.

Should we start talking to lenders now about financing, knowing that we're personally guaranteeing the loan or should we wait until everything is set up with the LLC? Is it difficult to buy a property and then transfer it over to the LLC at a later, albeit soon, date?

Thank you!

Thanks @Linval T. and @Seth Williams!

Thanks Seth!  Sorry, but I don't know how to link to your account with an @ mention(yet). 

As for the land side of things, I'm currently trying to figure out an area to pull my first list and do a mailer.  SC is one of those goofy states that require an attorney for closing, so it doesn't feel like a good fit for the low dollar deals I'm looking into to get my feet wet.  It seems like land out west is a little more user friendly from a transactional standpoint, no?

Hello! I recently joined the site and have enjoyed all of the helpful information. I was a landlord for 5 years of a townhouse that was "inherited" from my wife when we got married. I've got all of the typical tenant horror stories, and recently sold the property just to move on. Regardless, I'm branching out into rural land investing a la Seth Williams as well as a student rental house to hopefully generate some better returns and overall positive REI juju!

Looking forward to learning and participating!

Good morning!  Long time lurker here.  Glad to finally start participating. I'm currently in the process of searching for my second investment property.  My first was a townhouse near my residence.  The second one will be a rental house for students near a major university.  The average rents in that 8 block neighborhood go from $450-$800 per bedroom depending how close you are to campus (ie, houses on 1st ave rent for about twice as much as houses 8th ave).  

The house I'm interested in buying is on 7th ave, so on the further away end of the neighborhood, but still in the ideal zero vacancy part of town.  The problem is that it is a 4BR/1BA and they are renting it for $1450/mo which is $362.50/bedroom.  Houses on the same street rent for $500/mo so I can't understand why.  My only thought is that it's either:

1) The 1 bathroom effect

2) The current owner is an old man who is tired of landlording, hence why he's selling and he just hasnt kept up with market rents.

Question is for owners of student rentals:  I know that the name of the game in student rentals is to get as many bedrooms as possible into a space, even at the expense of dining rooms or additional living space.  This went from a 2BR to a 4BR by finishing the garage for example.  Have you noticed that having a higher bedroom to bathroom ratio has seriously decreased your tenant pool and therefore potential rents?

Thanks and sorry for the long post!