Are you brand new or are you just getting your feet wet with real estate investing? I am 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 potential real estate investors watch shows on how to move and misjudge the process. It’s more work than most investors expect. Doing your own repairs can save money, but many investors are not general contractors.
In conversation, friends and clients interested in real estate investing often ask me where to start. I ask them if they have considered college housing for rental income.
Some who would not have the necessary funds for renovations. That can be a problem, but it is not something the average person cannot overcome. FHA loans have guidelines and restrictions for making loans 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 a down payment of less than 20% require PMI or private mortgage insurance. This is a premium charged by lenders and a federal regulation that protects lenders in the event of default by the borrower.
Investors should understand that when you are financing, you are not allowed to do the repairs yourself. It is prohibited and it is Federal Law. This protects markets from the downturn, as many buyers don’t complete necessary repairs, lowering property values. It also protects lenders. If a borrower defaults, the lender would rather have a finished and updated property than a sore eye on their books.
Now you understand more about financing real estate investments in college housing. Now let me tell you why college housing is all the rage for real estate investors. The rent is always going to go up. Getting a college education is expensive, not all students want to live in a fraternity. Keeping up with current rental rates, but renting rooms for a price equal to or lower than the current one, will ensure good occupancy.
In Cincinnati, there are numerous universities and college campuses. An investor would have no trouble finding potential properties in Cincinnati for college housing.
Many students make their way through college and get jobs near their school. Some students really want to save on gas and car insurance. Finding affordable housing close to school and work is very attractive to them. Even better if they can walk, bike or bus to their destinations.
Advertising your university housing is easy and even free. Just list your rental properties in the schools. Talk to key figures like the debate team leader, the quarterback, or the college newsletter or blog.
I like helping new real estate investors, I have no problem with small private investors acquiring property to use as college housing for rental income. What I don’t like are big real estate investment firms with capital that rushes in, they buy all the properties they can at a discount and charge a premium to students.
There is an interesting debate on this. I found an article “The Dorm Debate” in the New Jersey Monmouth University student-run online newspaper “The Outlook.” In this article, college students pose the question; Should Colleges Provide Affordable College Housing?