Student Housing thread (last one!!!)
Apologies for those not interested in this topic but I promise this is last posting. I am ready to put in an offer with my investors on our first place (not the Granger house).
The house is not yet leased due to a death within the ownership group and a decision by their group to sell.
Questions for the Board:
- Are we late in the game in terms of leasing this year? Or are there still students looking?
What about grad students that are just starting in September? Would most of them still be looking?
Most of the students are home for the summer and I don't want to get stuck owning something for 4 months without any rent (or worse - the entire year).
Finding a tenant is the least of your worries as demand in the area is and always will be there.
Be careful on the downstroke and understand that you are buying at the top of the market. If it's my money I wait 2-3 years for the recession and then dig in on prime areas...that said...good luck.
Thanks for the reply. I don't really care that much if prices go up or down in the next five or ten years. In fact, I want them to go down.
I am in the early stages of setting up a private equity fund that will invest in student housing rentals at premier universities around the country. I am buying this one with my partners to "go through the process".
That being said, I don't think a recession will hurt housing near colleges, in fact it could even boost prices (unless we are talking a full blown meltdown). In the last two recessions, a lot of people who lost their jobs went to grad school to "wait out the job cycle". Also, the Fed probably drops rates back to zero and long term rates will drop as well.
So you think we are still ok for September leasing? Also, we should talk about the properties you are selling. Let me know if you want my e-mail.
Occupency limit is 4 "unrelated" people - but there are 5 rooms. There is room in the basement for a 6th room as well, but we would have to pay for that.
"That being said, I don't think a recession will hurt housing near colleges, in fact it could even boost prices"
The last recession in 2008 hurt housing prices, rental rates and everything else near colleges.
"In the last two recessions, a lot of people who lost their jobs went to grad school to "wait out the job cycle"."
This absolutely will not happen next time. No adults over 22 years old will be moving back to college to attend school in person. Every major university has online versions of their MBA programs including Michigan.
OP meant...
Question for the highly qualified and reliably business/real estate savvy MGoBlog board: How should I run my business that I've thrown tens of thousands of dollars into?
This is the perfect place to get market information. We have already done a couple of threads, info is better on this in terms of on the ground real time info than I have seen out there by the "experts".
But I don't really care that much if prices go up or down in the next five or ten years. In fact, I want them to go down.
I am in the early stages of setting up a private equity fund that will invest in student housing rentals at premier universities around the country. I am buying this one with my partners to "go through the process".
That being said, I don't think a recession will hurt housing near colleges, in fact it could even boost prices (unless we are talking a full blown meltdown). In the last two recessions, a lot of people who lost their jobs went to grad school to "wait out the job cycle". Also, the Fed probably drops rates back to zero and long term rates will drop as well.
So you think we are still ok for September leasing? Also, we should talk about the properties you are selling. Let me know if you want my e-mail.
I had people in my grad school program who didn't apply to get in until about now. So yeah, there will always be grad students looking.
Very helpful.
Graduate students almost always have to apply later than undergrads when they're first moving to Ann Arbor, as the traditional deadline for accepting a graduate admissions offer is April 15th or thereabouts. They're not going to be looking for a place until then or soon thereafter.
Where is the place at? I would say you are definitely way too late for undergrads (if it is a two bedroom you may find some stragglers) but could potentially be okay for grad students and are probably good timing for first-job young professional types moving to ann arbor (probably more than these you would think with Google and a few other companies).
Near Packard and Woodlawn - so that could work and that crowd is less cost sensitive.
It's like buying a car, can be a great deal or a disaster. This is part of a longer term plan for me so I am not too worried but thanks for the caution.
And, of course, scale helps too! I have clients looking for steady, if not spectacular returns (or at least the risk that comes along with that), so student housing is niche that fits the bill.
I also have a theory about longer term economic trends and how tech centers / univerisities will benefit from the (just starting) technological revolution. But that conversation is for a different time and preferable over lots of drinks.
Owning property for income is a full time job, unless you hire a management company. And then you spend all the profit on the management company, and only see money when you sell it from appreciation. You aren't the only person looking to buy the house for a profit and unless you have the scale to have your own management team, you can't compete with what those guys will pay and expect to see a profit.
It also sustains one of the worst parts of the Ann Arbor rental market: People who want to make money off the backs of students through owning and renting properties from afar. The best landlords I had in Ann Arbor were the landlords who owned a small number of properties, lived locally, knew their renters, and cared about both their properties and us. Heck, one of my landlords dropped off a loaf of Christmas bread.
On the other end of the spectrum were the people who didn't maintain their property, charged us a fortune, and gladly collected the check we'd have to drop off at their perfectly-maintained mansion-esque house outside of town.
Now that I live in a big city and have had a number of different kinds of rental situations, I know now that the Ann Arbor system is mostly slumlords who don't give a shit, and that's not normal--or OK. I don't have a lot of sympathy for people who are proud of trying to extract every penny out of kids who have very few options but to rent their garbage units at absurd prices.
Enjoy your investment opportunity, but I hope you actually care more than just collecting the revenue.
Tenants are easy to find. Good tenants are hard to find. If you are looking for a revenue source with consistent returns there are so many variables to consider. It is easier once you scale up but then it becomes a full time job if you want to do it right. As a landlord myself I wish you good luck.
other places because of bad credit, criminal record, or association with buckeyes or spartans. check references, court records, run a criminal record, etc.
I don't know the context of this thread or what you are planning on doing beyond (what sounds like) creating a small shop owning rental properties for grad students, but for the love of gawd don't run it like a slumlord. Give a shit about the places you own, the people who rent, and who you are serving. NYC is Ann Arbor on steroids, and I've lived in a couple of other big cities along the way, but a major component that can hollow out the soul of a city is how people treat others who live there.
Can you make 25%+ a year? If not, become a trader and then do something with your profits.
If the OP's intent is to do something long term., I would ask two questions.
1. With the cost of education continuing to go up, at what point do applicants start avoiding attending universities, particularly when in many areas the ROI is nil due to low wages?
2. With technology/advanced manufacturing/AI/robotics starting to eat up jobs, both blue collar and white collar, do you feel secure that college over the next few decades is going to be an option that makes sense?
In the short term, with the right asset purchases, you are probably fine. In the long term, I think the investment could have some serious issues, although with the shortage of rental housing nationwide, you do have a buffer. I hate to buy anything when markets are at or near peaks.
If you're looking at schools across the country, you are, in fact, trying to be an absentee slumlord. Nothing local about being a landlord in California, Indiana, Texas, Michigan, and Florida all at once.
Much sympathy for the poor grad students who will be renting from an unaccountable, anonymous landlord in a different timezone.
Where do you get politics out of that?
But, OK. Have fun being an absentee landlord in three different timezones. And upvoting your own posts.
I recommend staying in West Quad.
You guys, the dorms have become sentient.