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.
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!
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。
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!!!
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
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
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.
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 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!