All Forum Posts by: Will Pieper

While I think everyone's caution and concern are understandable, I don't think you have to go through the "conventional" methods of learning about real estate investing anymore. While self-managing and being able to drive to your property are great experience, if you plan to be in OOS investing, you won't be doing these things anyway so I don't think it's totally necessary to have done them. If I were in your shoes I would find a handful of markets (maybe 3) that you are interested in and start talking to people there. 

Talk to the local property managers and realtors in the area and let them tell you about it and what they think about your specific situation and if they want to help. If you are looking at an area, look up crime or call the local chamber of commerce or police department and see what they think about the area. I do agree that certain banks and professionals are going to be skeptical working with you due to your age and the situation but it is something that is becoming more common and if you have the financials and motivation to back it up, somebody will be happy to help you. Even established adults who are investing OOS have trouble finding the resources and people they trust in OOS markets but with time, effort, and caution, you can do it.

Before you jump into a property, I would highly suggest talking with someone you know and trust that has experience in investing and having them look over everything. Maybe even have them reach out to the people you have been talking to, and seeing if they get the same information and feel that the people you are working with are being truthful. Do your research, look up reviews, find out how much business they do and if they are a good company. Whether you are a local millionaire or a teenager investing out of state, established companies and people don't want to do bad business, so they will either write you off and not help you or help you the best they can. Be smart, be cautious, but I think it is possible.

Good Luck!

Also you should take into account that just because they have that much equity doesn't mean they will always just lend it to you, even up to 80%. Most banks that I have dealt with still want to make sure that your income can cover such a large loan if you decide to use that money for something since there is really no limitation on what you can use the money for once the HELOC is created. You may be better off looking into working with your parents or the owner and seeing if a bank will allow you to use it as collateral for an investment property that is able to cover its own payment, even if you have a 100% loan, and then your personal income or that of your parents or the owner can act as the off-set to make sure the payments are made in the event of vacancy, disaster, or something else that affects the assets income. Like @Jake Wiley said though, you really need to talk to a lender to see what the options are, they should be happy to talk to you.

It should but if you are seeing a marketed cap rate, sometimes they like to fudge the numbers. Your payment and interest is typically not included. 

The best way to evaluate is 1. Find a realtor that is familiar with this type of investment. 2. Ask for a rent roll and Trailing 12 which is the last 12 months of all expenses and income associated with the property. With this small of a property they may not keep that but you should at least try to figure out what capital improvements (CAP Ex) has been done and do research to try to come up with an operating expense. 3. Take all of the expenses for the year, stuff like: Vacancy, maintenance and repairs, management, concessions, insurance, taxes, and any utilities the landlord pays, and subtract that from the annual income. That is your Net Operating Income or NOI. Now take that number and divide it by the asking price. This is your CAP rate. There may be more expenses and there can also be additional income like laundry or parking so keep these in mind. Best to work with someone who has experience with this type of property in that area to ensure you are evaluating it correctly. Good luck!

I am from Columbia, MO and have lots of friends in the KC area, Independence included. All I have to say is be careful, there are some really shady parts of Independence. You might reach out to other agents or PM companies and just see what they say about the area, the agent, and their company. Somewhere like Independence I would think most people have at least heard of someone or knows somebody who has dealt with them.

Hello David,

Are you determined to buy in your area or have you considered investing remotely? If your goal is cash flow it may be better to aim for properties in the midwest or southwest where cashflow is easier to obtain. HELOC's are good but you will still have to pay the payment and interest on it which will slow down your cash flow. Maybe consider selling one of the properties if that is a possibility and then using that money to buy cash-flowing rentals. Like others have said, start with a smaller unit count like 8-plex and continue to save and grow your portfolio over time. It will take time but it seems like you are doing well with saving so far so you will achieve it.

 I could see that, still the rent to sale price seems off. Do you think that rents in these areas tend to increase faster than typical rentals or about the same? I do believe that while they see more wear and tear, they probably don't need to be as pretty for students. 

I am also learning about student rentals but I can tell you that there are specific areas here in Columbia that students tend to rent in and other areas that they just happen to rent in typically because they are marketed for it and have short, direct routes to campus. Some areas are almost all students. The areas that are primarily students are on the outskirts of campus but there are also neighborhoods that are 2-5 miles away that lean more students than other types of renters. A local Realtor or Property Manager should be able to help you identify these areas.

Hey All, 

I live in Columbia, MO and have been in long-term rentals for a while but have yet to venture into Student Rentals. I am considering but even as a Realtor and local investor it is hard for me to see the value. The sale prices are usually inflated when compared to a non-student rental and I imagine the units see more wear and tear than other types of real estate. I am interested to know what drives other peoples interest in this property class and what others are seeing as far as return on investment in terms of GRM or Cap Rate in similar areas like other SEC colleges. Also for those of you that buy these properties, do you evaluate these types of properties differently than other property types?

Thanks,

Will

Congrats! I own one in at The Lake of the Ozarks with very similar specs. We are always 100% full (out of the two seasons we have owned it) during the summer and if we manage the price, tend to stay full enough to cash flow in the less busy season. Keep up the good work. These vacation condos are awesome!

Como REI is a great resource. I usually try to get people together every few months for something a little less formal, just happy hour with a bunch of investors. I will add you to my list of people to invite.