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Stream of income in 15 years, via "dorms"
Old 09-03-2009, 11:46 AM   #1
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Stream of income in 15 years, via "dorms"

I like the idea of creating streams of income, to reduce reliance on this crazy stock market. Obviously, pensions and annuities come to mind. So does real estate. I wonder if you kind people would share your views, and especially experience, with owning rental property.

My specific plan is to capitalize on the rapid growth of Liberty University, a Christian college where I live. I am considering building a "dorm" apartment with common living areas and 3-4 bedrooms, each with it's own full bath. I saw places like this online (but can't find a link at the moment).

If the rents cover the 15 year mortgage, I am basically creating a stream of income that will pay me $1600/mon in 15 years. That covers the majority of my living expenses.

Thanks in advance for any feedback.
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Old 09-03-2009, 11:59 AM   #2
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This thread is a couple of years old, but it may help...

Rental income to FI RE earlier
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Old 09-03-2009, 12:00 PM   #3
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Land lording to college students gives me the willies. Sounds like it could be a lot of work.
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Old 09-03-2009, 12:15 PM   #4
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My aunt and uncle own several apartments in a college town (studios and 1 bedroom) and they rent them mostly to university students. They have done it for 20 years, own the properties outright and they rarely have vacancies, even during the summer. Their properties generate a great deal of income which supplement their SS and pensions. They require that students' parents cosign the lease.
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Old 09-03-2009, 12:20 PM   #5
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Found the link, The Grove apartments. "Dorm price, apartment quality."
Dorm-style apartments toss up college living - News
The existing dorms offer a 4 bedroom, 2 bath, common living for $600/month per 125 sq. ft room.
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Old 09-03-2009, 12:28 PM   #6
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bbbamI - thanks! I will check that out, sorry I didn't find it before posting.

Notmuchlonger - I agree that renting to college students seems scary. Something I didn't mention is that this very conservative school only lets 21 year olds live off campus, so they should be more mature. Also, they are not supposed to drink or carry on as many students do, or they can be expelled I think.

Firedreamer - thanks for that. I really think it could work out.
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Old 09-03-2009, 12:41 PM   #7
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There are also apartments like that in Harrisonburg (JMU) you could probably check out. The ones my daughter was looking at are ~$400 for a room in a 4BR 2Ba, which isn't cheap for a town like this, but being furnished, and not being responsible for the whole rent if you're roomies bolt seems nice. I would guess Lynchburg would be similar, and you're right, Liberty should attract less partiers than JMU or Lynchburg College.

One thing that helps with the one DD is looking at is the on-site manager, who has a real good rep of keeping things in control and also being helpful to the kids. It's a large complex so they can afford on-site mgmt. Plus they provide for rommate matching, and that's probably a bit easier to do in a large place.
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Old 09-03-2009, 12:51 PM   #8
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(FAQ archive) Landlording/Real Estate Investment
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Old 09-03-2009, 01:13 PM   #9
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Quote:
Originally Posted by walleye View Post
I like the idea of creating streams of income, to reduce reliance on this crazy stock market. Obviously, pensions and annuities come to mind. So does real estate. I wonder if you kind people would share your views, and especially experience, with owning rental property.

My specific plan is to capitalize on the rapid growth of Liberty University, a Christian college where I live. I am considering building a "dorm" apartment with common living areas and 3-4 bedrooms, each with it's own full bath. I saw places like this online (but can't find a link at the moment).

If the rents cover the 15 year mortgage, I am basically creating a stream of income that will pay me $1600/mon in 15 years. That covers the majority of my living expenses.

Thanks in advance for any feedback.
Rental Income is a great way to go, but building a place and having to deal with multiple tenants sounds like a lot of work. I've owned a 2 family in Boston for 10 years so my tenants live below and I only have to deal with a single person or a couple as it's a one bedroom flat. Right now I get $1500/month for it and the mortgage will be paid off in a couple of years. Then I might move downstairs and rent out the flat I live in now and I should get $2500/mnth for that as it has 3 bedrooms.
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Old 09-03-2009, 01:30 PM   #10
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...Something I didn't mention is that this very conservative school only lets 21 year olds live off campus, so they should be more mature. Also, they are not supposed to drink or carry on as many students do, or they can be expelled I think.
Um...I went to parochial school for 12 years and look what happened to me! Add to that some of the stories I've heard about church camp (teenage) from friends over the years.
Seriously, it might make sense for you to visit another off-campus living address and see what you can see.
At age 21, most of the students will probably be OK. But...
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Old 09-03-2009, 02:37 PM   #11
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RunningBum - Don't you love our Blue Ridge Mountains? Excellent feedback for me about JMU - do you mind sharing the name of the places for ~$400 (same rent per room as I was planning).

Freebird - I'm an engineer too, raised in the Jamestown NY area. Do you like Skynyrd, or is the name unrelated? To your point, lots of people here claim that Liberty students are some of the wildest since they come from very conservative families that have kept them under the thumb. Now they taste freedom ...

nun - I salivate over $1500 a month because it goes a long way where I live.

Nords - I am eagerly devouring the info.
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Old 09-03-2009, 02:51 PM   #12
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After 25 years or so of landlording I'm trying to retire from it. You are right about the multiple income streams - they are nice. Also much prefer college students as renters - they seem fresher and brighter and less beat down and sad than others competing for the same price apartment. After being a landlord for that length of time I'm tired of it - don't want to be the archetypal 75YO landlord with a stogie clamped in the corner of my mouth plunging yet another toilet. Selling isn't working out at this time, so I'm training a younger man to do most of the direct contact work - it will cut into our profits a bunch, but should still generate our annual monetary needs handily - down the road 5 or 10 years from now we'll see how selling goes...
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Old 09-03-2009, 03:02 PM   #13
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After 25 years or so of landlording I'm trying to retire from it. You are right about the multiple income streams - they are nice. Also much prefer college students as renters - they seem fresher and brighter and less beat down and sad than others competing for the same price apartment. After being a landlord for that length of time I'm tired of it - don't want to be the archetypal 75YO landlord with a stogie clamped in the corner of my mouth plunging yet another toilet. Selling isn't working out at this time, so I'm training a younger man to do most of the direct contact work - it will cut into our profits a bunch, but should still generate our annual monetary needs handily - down the road 5 or 10 years from now we'll see how selling goes...
With my place I seldom have to do anything other than cash the cheques. I also like to rent to younger folks because I agree that they are just brighter and less cynical
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Old 09-03-2009, 03:08 PM   #14
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Walleye, I have three single family rentals in a Florida college town. They are not located close to the two universities however so most tenants are young families. It can be a pain at times but since I have no mortgages on the properties, the income really comes in handy. BUT, when the time comes (2 and 1/2 years if my plan holds) for FIRE, it would be nice to quit the landlord job also.

Not a good time to sell and at the moment my tenants are stable so OK for now. I have had great and not so great experiences with the rental business but it does enable me to save more and improves my standard of living.

I have one place rented to an older couple who have really improved the place and show no indication of leaving. For folks like that, it is worth keeping the rent as low as possible.
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Old 09-03-2009, 03:41 PM   #15
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In college 4 of us rented half a duplex from a guy. We were pretty much perfect tenants, even though we liked to party. I think this skews my thinking.

Numbers:
- Put $36K down/sweat equity to hit 20% of a $180K building + land, and charge 4 x $400 = $1600 per month. How realistic is $180K?
- I expect a small positive cash flow and 8 hours\week maintenance,etc.

If I have the good fortune of good tenants and steady rental, is it worth it? That's what I'm mulling over.
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Old 09-03-2009, 05:18 PM   #16
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You might find that you have an interesting time getting financing for such a venture. Worth looking around before you make too many assumptions.

Personally, I think this sounds like a lot of hassle and work for a potentially iffy return. But do some investigating and spreadsheet it to be sure.
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Old 09-03-2009, 06:02 PM   #17
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My boss's daughter lived with 6 or 7 other girls in a big two story house at her college. Me and my boss dropped in unexpectedly one saturday morning. The place was trashed - empty beer kegs from their "kegs and eggs" party, orkin receipts under the fridge magnet, a ceiling leak that conveniently dripped into the kitchen sink. 2 or 3 girls lived on each floor.

It was a cash cow for the owner though - hardly any maintenance and I think the place rented for well over $2k per month all year.
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Old 09-03-2009, 09:02 PM   #18
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RunningBum - Don't you love our Blue Ridge Mountains? Excellent feedback for me about JMU - do you mind sharing the name of the places for ~$400 (same rent per room as I was planning).
Love it! I'm at Wintergreen. I get down to Lynchburg once in awhile. There are some nice trails to run around there, and I've got to get my Bojangle's fix once in awhile!

The Mill is the place I was thinking of. The Mill Apartments - Home I know there are other places, but DD says this place isn't crazy with the parties, and from watching the local online newspaper I think she's right, comparatively. I can't recall the names of the other places but you can probably search and find them.
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Old 09-03-2009, 09:39 PM   #19
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Not for me but some people really like it and it is usually because they have good renters. I did rentals for 16 years and much prefer bonds and stocks now.
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Old 09-04-2009, 09:00 AM   #20
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Thanks to all for your input. I am leaning toward "the hassles will outweigh the effort and return".

I guess I'm interested in leveraging my ability to borrow (preapproved recently for a $500K mortgage for an auction property) to create income with other people's money.
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