8 units apartment building, totally 24 bedrooms with 24 bathrooms, currently rented by rooms---so totally 24 leases. Near a major university campus. Asking is about $1.5 million. Rent is $595/room including all utilities and internet. $595/ room x 24 rooms = $14280/month. But utilities paid by owner is about $2000/month.
1. Conditions pretty good. Built around 2006 and current owner did some renovation in 2019 with all new appliances/ flooring etc. There are a few deferred maintenance but not much.
2. Current management company sucks. Right now there are 3 rooms vacant, 3 tenants owe more than $2000 (rent due), and another 3 tenants owe several hundreds. Current rent collected is around $11000 --- $12000 per month.
We have 15 years experience dealing with student housing. We think we can turn it around after taking over.
3. Rent has more room to go higher after active management.
Two questions:
1. We lives about 80 miles away from the property (about 1.5 hours drive）。We plan to go there twice per week to manage the property at the beginning. After bad tenants kick out and good tenants move in, we expect to go there once a week. Is that practical? Since conditions of the property is not bad at all, main issue is to evict bad tenants and look for good ones, we think. Maybe we somehow under-estimate the work involved.
What do you think?
2. The property is not on the MLS. We have RE license and can act as buyer agent for ourself. Should we ask the listing agent the commission split or simply ask listing agent as our buyer agent? The market is pretty hot locally, but the property was on the market for 2 weeks unsold. Normally buyer agent's commission is around $35k. Right now It's hard to negotiate down the price with the sellers. 大家觉得应该去争取这个$35K的 buyer agent's commission 吗？
Listing is not on the MLS. Clearly the listing agent does not want to share commissions with the buyer agent. Even if we act as buyer agent for ourself, is that still legal for them to pay no commission to buyer agent?
Sorry for using English. Chinese input on my computer is too slow.
1. You are right. With nearly $10,000/month NOI after management improvement, 是可以半躺平了。
2. This suggestion is really good. We originally thought to hire a student as a part time helper. Clearly a handyman is much better. Hope we can find a good one----though not easy.
3. For buyer agent commissions, just googled it and found a biggerpockets link. Bascially most commercial real estate buyers do not have their buyer agent. If they want one, in most cases the buyers need to pay commissions to their buyer agent. It is not the seller's responsibility to do that, especially in this hot market condition. This is different from residential market. So forget about the commission. Get the deal is the most important!!!
The price is little high of course. But considering the condition it is not too bad. it is still doable. We are 1.5 hours away, so do not want to do big renovations. Of course we lose the opportunity of forced appreciation (renovation/ increase rent/ cash out). We can improve the management to get better numbers on P&L form.
In this hot market condition, not many good deals now. Maybe we need to more patience. :)
turnover rate is 50% or higher for student housing
In many years the turnover rate is 50% or even higher for student housing. 而且集中在one or two weeks in July-August. So it is stressful during that period. But students usually pay rent on time and easy to deal with.
The renovation done by current owner includes: LVP flooring, ss appliances, granite counters.
We are a little far away and do not want to do remote renovations. Right now labors and materials are expensive too.
We are thinking about adding some furnitures for some bedrooms. Some students do not have furniture and therefore this should be attractive to them. Monthly rent can be increased $75/month.
If adding furniture to 12 bedrooms, rent increase is: $75/month x 12 monthx 12 beds= $10800/year. Current cap rate is around 5%. The addition of $10800/year is equal to $216,000 property appreciation ($21600/ 5%). Do you think furnitured bedroom is a good approach? Cost of those furniture should be around $1500/bedroom x 12 rooms = $18k.
1. We are targeting graduate students or at least Juniors/seniors. More mature, easy communicate and less party!
2. Most student tenants we have are graduate students. But they are usually a little price sensitive. In other words, we have to sacrifice price a little bit to attract them. Personally we think it is worth it.
3. Rooms with furniture usually attract young students----fresh out of the dorm. We can get higher rent, better returns, but of course more management headache. That is the reason we are a little hesitate to provide furniture. Most likely we will try in a small scale to see how it goes.
Since all utilites are included in the rent. The effective rent per room is lower, but not that bad. Of course the price counted in the higher management duty already due to 24 individual leases.
1. For the student housing you built, do you provide all bedroom furniture? If yes, how many rent increase can you have compared to no furniture?
2. Will you be able to attract graduate students if providing furniture with higher price? They are usually more mature and easy to communicate compared to unders. But in our experience, they are more price sensitive---they tend to look for good deals and not willing to pay higher price for higher quality/ convenience.
各位大佬。 尽请指教。
8 units apartment building, totally 24 bedrooms with 24 bathrooms, currently rented by rooms---so totally 24 leases. Near a major university campus. Asking is about $1.5 million. Rent is $595/room including all utilities and internet. $595/ room x 24 rooms = $14280/month. But utilities paid by owner is about $2000/month.
1. Conditions pretty good. Built around 2006 and current owner did some renovation in 2019 with all new appliances/ flooring etc. There are a few deferred maintenance but not much.
2. Current management company sucks. Right now there are 3 rooms vacant, 3 tenants owe more than $2000 (rent due), and another 3 tenants owe several hundreds. Current rent collected is around $11000 --- $12000 per month.
We have 15 years experience dealing with student housing. We think we can turn it around after taking over.
3. Rent has more room to go higher after active management.
Two questions:
1. We lives about 80 miles away from the property (about 1.5 hours drive）。We plan to go there twice per week to manage the property at the beginning. After bad tenants kick out and good tenants move in, we expect to go there once a week. Is that practical? Since conditions of the property is not bad at all, main issue is to evict bad tenants and look for good ones, we think. Maybe we somehow under-estimate the work involved.
What do you think?
2. The property is not on the MLS. We have RE license and can act as buyer agent for ourself. Should we ask the listing agent the commission split or simply ask listing agent as our buyer agent? The market is pretty hot locally, but the property was on the market for 2 weeks unsold. Normally buyer agent's commission is around $35k. Right now It's hard to negotiate down the price with the sellers. 大家觉得应该去争取这个$35K的 buyer agent's commission 吗？
Listing is not on the MLS. Clearly the listing agent does not want to share commissions with the buyer agent. Even if we act as buyer agent for ourself, is that still legal for them to pay no commission to buyer agent?
Thanks for your input!
1，就按你给的数字，租金减去开销，大概还有地税保险等，不考虑贷款，会有1万净收入，或接近，可以躺平了，而户头上有1.5米，你能做什么?敢不敢退休?
2，你已经有管理经验，建议以夷治夷，雇个on-site manager ，免一半房租，协助管理，不要找学生，找个handyman 最好。
3，财权自己掌控，房租寄到你账户。
4，佣金不大好说，如果是我，遇到好的deal，我不大在乎commission，即使我有经纪执照。
Sorry for using English. Chinese input on my computer is too slow.
1. You are right. With nearly $10,000/month NOI after management improvement, 是可以半躺平了。
2. This suggestion is really good. We originally thought to hire a student as a part time helper. Clearly a handyman is much better. Hope we can find a good one----though not easy.
3. For buyer agent commissions, just googled it and found a biggerpockets link. Bascially most commercial real estate buyers do not have their buyer agent. If they want one, in most cases the buyers need to pay commissions to their buyer agent. It is not the seller's responsibility to do that, especially in this hot market condition. This is different from residential market. So forget about the commission. Get the deal is the most important!!!
Big thanks!!!
3 bed/ 3 bath for each unit, total 8 units.
The price is little high of course. But considering the condition it is not too bad. it is still doable. We are 1.5 hours away, so do not want to do big renovations. Of course we lose the opportunity of forced appreciation (renovation/ increase rent/ cash out). We can improve the management to get better numbers on P&L form.
In this hot market condition, not many good deals now. Maybe we need to more patience. :)
In many years the turnover rate is 50% or even higher for student housing. 而且集中在one or two weeks in July-August. So it is stressful during that period. But students usually pay rent on time and easy to deal with.
No easy money. :)
The renovation done by current owner includes: LVP flooring, ss appliances, granite counters.
We are a little far away and do not want to do remote renovations. Right now labors and materials are expensive too.
We are thinking about adding some furnitures for some bedrooms. Some students do not have furniture and therefore this should be attractive to them. Monthly rent can be increased $75/month.
If adding furniture to 12 bedrooms, rent increase is: $75/month x 12 monthx 12 beds= $10800/year. Current cap rate is around 5%. The addition of $10800/year is equal to $216,000 property appreciation ($21600/ 5%). Do you think furnitured bedroom is a good approach? Cost of those furniture should be around $1500/bedroom x 12 rooms = $18k.
Property appreciation = $10800 rent increase/ 5% cap rate = $216,000 property appreciation
自己管理，应该是棵摇钱树。
24房各带卫生间，有些country inn都未必能做到，相当于24个studio，或者一个中小型旅馆。很多老一代移民，梦寐以求的就是有这么个产业。
我还经历过一个超大型公寓，160 units，管理不善，空置率25%，结果7百万拍卖出手。
新买家接手，就是我的前老板，花三十万装修(银行要求)，然后5个负责出租管理员工全部开掉，用5个也实在太多，两个就足够，我一个人都顶过两天。
改头换面，很快出租率接近100%，南加州现在以最少最少30万一个单位计算，可以说赚翻了，同时租金也数到手软。
你如果能拿下自己管理好，租金立马能上去。路是远一点，和有一两个独立屋不同，二十几个单位值得开车一个多小时过去，总有些事情。再说，目前也空几个房，拿一个先自己用着，有事情就住两天，花点精力把管理的事情搞妥当，尽早物色一个帮手，以后的事情就好办了。
管理上多斟酌一下，就可以了。
我租的中国学生，到暑假，他们就转租，还有就是住几年就换，一个一个的找很麻烦。有的房客之间有矛盾，让房东参与。特头大。 但是利润高，很少有不付房租的。
提个醒- 你这个房子装成每个卧室都有自己的卫生间。这些卫生间做的时候都是有permit的吗？如果没有permit, 那也是个后患
我听说过有的房东做学生的生意，加了很多卫生间，空间利用到极致，但是加的卧室和卫生间都是没有permit，房子被改得卧室很小，卫生间也是极小。
这是投坦闪光的地方。 也希望对大家都有帮助
1. We are targeting graduate students or at least Juniors/seniors. More mature, easy communicate and less party!
2. Most student tenants we have are graduate students. But they are usually a little price sensitive. In other words, we have to sacrifice price a little bit to attract them. Personally we think it is worth it.
3. Rooms with furniture usually attract young students----fresh out of the dorm. We can get higher rent, better returns, but of course more management headache. That is the reason we are a little hesitate to provide furniture. Most likely we will try in a small scale to see how it goes.
谢谢Amy 的讨论。 你是商住房的大佬。 ：）
Thanks for your reminding. You are very experienced in student housing.
1. You are right. High turnovers is the headache for student housing.
2. We usually stay away from Chinese students. Reasons you know. The best student tenants are American graduate students.
3. Each unit is 3 bed/3 bath. It was built like this at the beginning. So no code violation issues.
Thanks again!
Totally 8 units (3 bed/3 bath each). 24 bedrooms.
Since all utilites are included in the rent. The effective rent per room is lower, but not that bad. Of course the price counted in the higher management duty already due to 24 individual leases.
Thanks
Thanks for your opinion.
Two questions for you:
1. For the student housing you built, do you provide all bedroom furniture? If yes, how many rent increase can you have compared to no furniture?
2. Will you be able to attract graduate students if providing furniture with higher price? They are usually more mature and easy to communicate compared to unders. But in our experience, they are more price sensitive---they tend to look for good deals and not willing to pay higher price for higher quality/ convenience.
What do you think? Thanks!
另起一贴算了