Investment in Real Estate, University Housing

May 13, 2022 0 Comments

Are you brand new or just getting your feet wet with real estate investing? I’m a real estate agent, my friends and I watch HGTV. Let me tell you that there are many ways to invest in real estate. I think a lot of aspiring real estate investors watch shows about moving houses and misjudged the process. It’s more work than most investors are willing to do. Doing your own repairs can save you money, but many investors are not general contractors.

In conversations, friends and clients interested in investing in real estate often ask me where to start. I ask them if they have thought about college housing for rental income.

Some that would not have the necessary funds for renovations. That can be a problem, but it’s not one the average person can’t overcome. FHA loans have guidelines and restrictions on lending to investors. You can have two non-investor residential loans in Ohio. Properties must be at least 50 miles apart. There are FHA loans for investors and a slightly higher interest rate. FHA 203k loans are for distressed properties and include up to $35,000 for repairs.

The great thing about FHA loans is that they only require a 3.5% down payment. You should know that loans with less than 20% down payment require PMI or private mortgage insurance. This is a premium lenders fee and a federal regulation that protects lenders in the event of borrower default.

Investors need to understand that when you finance, you cannot do the repairs yourself. It is prohibited and the Federal Law. This protects markets from falling as many buyers fail to complete needed repairs, driving down property values. It also protects lenders. If a borrower defaults, the lender would rather have a finished and up-to-date property than a distressed sore on his books.

Now you understand more about financing college housing real estate investments. Now let me tell you why college housing is all the rage for real estate investors. The rent will always go up. Getting a college education is expensive, not all students want to live in a fraternity. Staying up to date with current rental rates, but renting rooms for the same or slightly lower price than current will ensure good occupancy.

In Cincinnati, there are numerous colleges and university campuses. An investor would have no problem finding potential properties in Cincinnati for college housing.

Many students work their way through college, taking jobs near their school. Some students really want to save on gas and car insurance. It is very attractive for them to find affordable housing close to school and work. Even better if they can walk, bike or take the bus to their destinations.

Advertising your university housing is easy and even free. Simply post your rental properties to schools. Talk to key figures like the head of the debate team, the quarterback, or the college newsletter or blog.

I like to help new real estate investors, I have no problem with small private investors acquiring properties to use as college housing for rental income. What I don’t like are big capital-filled real estate investment firms that swoop in, buy all the properties they can at a discount, and charge students a premium.

There is an interesting debate about this. I found an article “The Dorm Debate” in New Jersey Monmouth University’s student-run online newspaper “The Outlook.” In this article, college students pose the question; Should colleges provide affordable college housing?

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