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Buying vs Renting Apartment near College

I'm a College Park student currently living on campus. I will eventually have to move out of my dorm and into an apartment. Public schools like UMD are increasing in demand due to private schools having rising tuition costs. I could rent an apartment for 2 years or I could buy my own and after I graduate, rent it out for $$. My parents can probably help me pay it out either way. I do have my own income of $15/hr tutoring and I tutor around 11 hours a week. Would renting or buying an apartment be better?


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Re: Buying vs Renting Apartment near College

First question how long to plan on being in that location?  What is college housing like around campus?   How strong is the off campus demand?  I have a friend who now makes his living off apartments and small houses near where we went to school.  

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Re: Buying vs Renting Apartment near College


Backwoods wrote:

First question how long to plan on being in that location?  What is college housing like around campus?   How strong is the off campus demand?  I have a friend who now makes his living off apartments and small houses near where we went to school.  


2 years. Very low quality expensive housing due to overcrowding. It's very strong. Does your friend still need to work?


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Re: Buying vs Renting Apartment near College

2 years is very short to live there not worth it just for that time.  If I was buying for long term I would plan on holding  on  for say 5 to 7 years minimum.  My friend started off with a small old home but it had 4 bedrooms 2 baths.  He got this start while in school with downpayment from dad and mom.  The rent from 2 rooms covered  the payments , the third room  profit and his was "free."    Every year he has bought something be it a duplex, small apartment building or small house.  My guess he owns between 75 and 100 units within 1 mile of the edge of campus.  He for the first few years had another job and used a repair service for stuff and then every summer he did paint /repairs.  but for atleat the past 20 years he and his wife do it all.  He spends the summer doing touch up painting on a room by room basis.  And about every 5 years does hire a firm for a make over.  Aside from renting them out in the Fall and getting the kids out at the end of the term  he has a very quite life.  A few clogged drains, lost keys and kids that don't pay ontime.  My best guess when school is in sesssion aside from collecting rent he works 10 hours a week but when its summer I know both of them paint and clean over 84 hours a week each.  He has far mare spare time than I and just spent 2 months on vacation in Europe. He net worth now well over 10 million I am sure.  Interesting life style.  It helped a lot when he started that parents backed him with downpayments.   Their  son helps them  not as we  are not quite as young as we were then.  I doubt that he would take on any work for any one else. 

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Re: Buying vs Renting Apartment near College

[ Edited ]

Backwoods wrote:

2 years is very short to live there not worth it just for that time.  If I was buying for long term I would plan on holding  on  for say 5 to 7 years minimum.  My friend started off with a small old home but it had 4 bedrooms 2 baths.  He got this start while in school with downpayment from dad and mom.  The rent from 2 rooms covered  the payments , the third room  profit and his was "free."    Every year he has bought something be it a duplex, small apartment building or small house.  My guess he owns between 75 and 100 units within 1 mile of the edge of campus.  He for the first few years had another job and used a repair service for stuff and then every summer he did paint /repairs.  but for atleat the past 20 years he and his wife do it all.  He spends the summer doing touch up painting on a room by room basis.  And about every 5 years does hire a firm for a make over.  Aside from renting them out in the Fall and getting the kids out at the end of the term  he has a very quite life.  A few clogged drains, lost keys and kids that don't pay ontime.  My best guess when school is in sesssion aside from collecting rent he works 10 hours a week but when its summer I know both of them paint and clean over 84 hours a week each.  He has far mare spare time than I and just spent 2 months on vacation in Europe. He net worth now well over 10 million I am sure.  Interesting life style.  It helped a lot when he started that parents backed him with downpayments.   Their  son helps them  not as we  are not quite as young as we were then.  I doubt that he would take on any work for any one else. 


2 years for him, X number of years renting it.

 

It's a smart play financially IMO if you can swing it in a place whose demand isn't going to see a decline for a while (near campus).

 

I recently did the UCI thing, and while it fell apart for other reasons if I could've swung it as a second home (sadly only 36 miles away even if it takes me 2-3x as long to drive that as most places in America) wasn't lost on me I could've easily turned $2300 or so in rent 9 months of the year and broke even on 3 on a $1100/month mortgage without trying hard and basically would've been getting ballpark 6.75% or something similar and that's figuring $500/month simply lost to rental upkeep.  That's current market, and I don't see living expenses at most colleges going down anytime soon, rents will likely continue to levitate as long as there's pent up demand.

 

Rental opportunities in high demand areas that have lots of turnover like colleges can be solid, especially since most people are looking at the short term economics from my viewpoint.  If you can swing it, I'd do it personally, but run the numbers yourself to see if it makes sense... college students aren't exactly awesome tenants so make sure to keep a healthy SWAG for repairs and what not.  If I were underestimating the cost of upkeep and it was more like 12K/year instead of 6K/year, that drops my profit by a lot for example, but can probably find some statistics from other landlords at various universities and get an idea.  Sounds like UMD students expectations of a nice place aren't as high as UCI's student population who will pay for something better haha.

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Re: Buying vs Renting Apartment near College

[ Edited ]

There is a substantial cost to managing and maintaining rentals.  College students aren't the best tenants in terms of taking care of apartments.  Hell, even people you would think would be responsible -- adult professionals renting high-end properties -- still cause substantial damage.  You would not believe how many of our properties needed new floors, fence, walls (?!?!) over the years.  Admittedly, we need to maintain a higher level of finish that would not be necessary for college kids in a college town. 

 

BTW, considering the demand for housing that you say, I'm surprised property prices would be low, as you suggest. BTW, about 50% of my college friends had their parents buy them a condo or house to live in while at uni. Most sold after graduation (most for a profit; parents were no fools when it comes to money) as very few were interested in managing property -- they had more interesting, more fiscally rewarding opportunities. 

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Re: Buying vs Renting Apartment near College


tacpoly wrote:

There is a substantial cost to managing and maintaining rentals.  College students aren't the best tenants in terms of taking care of apartments.  Hell, even people you would think would be responsible -- adult professionals renting high-end properties -- still cause substantial damage.  You would not believe how many of our properties needed new floors, fence, walls (?!?!) over the years.  Admittedly, we need to maintain a higher level of finish that would not be necessary for college kids in a college town. 

 

BTW, considering the demand for housing that you say, I'm surprised property prices would be low, as you suggest. BTW, about 50% of my college friends had their parents buy them a condo or house to live in while at uni. Most sold after graduation (most for a profit; parents were no fools when it comes to money) as very few were interested in managing property -- they had more interesting, more fiscally rewarding opportunities. 


Out of curiosity what's your average upkeep per year per unit?

 

These days I figured all the rage was to just outsource the property management to some group that does that for a living.

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Re: Buying vs Renting Apartment near College

Property management is handled by a 3rd party, but they only vet possible tenants, collect rent, and call in repair people. The cost for those repairs, as well as grounds keeping, are paid by us. Not to mention property taxes, which can be substantial depending on where they are.
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Re: Buying vs Renting Apartment near College


tacpoly wrote:

There is a substantial cost to managing and maintaining rentals.  College students aren't the best tenants in terms of taking care of apartments.  Hell, even people you would think would be responsible -- adult professionals renting high-end properties -- still cause substantial damage.  You would not believe how many of our properties needed new floors, fence, walls (?!?!) over the years.  Admittedly, we need to maintain a higher level of finish that would not be necessary for college kids in a college town. 

 

BTW, considering the demand for housing that you say, I'm surprised property prices would be low, as you suggest. BTW, about 50% of my college friends had their parents buy them a condo or house to live in while at uni. Most sold after graduation (most for a profit; parents were no fools when it comes to money) as very few were interested in managing property -- they had more interesting, more fiscally rewarding opportunities. 


What were those more rewarding oppurtunities?


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Re: Buying vs Renting Apartment near College


Revelate wrote:

Backwoods wrote:

2 years is very short to live there not worth it just for that time.  If I was buying for long term I would plan on holding  on  for say 5 to 7 years minimum.  My friend started off with a small old home but it had 4 bedrooms 2 baths.  He got this start while in school with downpayment from dad and mom.  The rent from 2 rooms covered  the payments , the third room  profit and his was "free."    Every year he has bought something be it a duplex, small apartment building or small house.  My guess he owns between 75 and 100 units within 1 mile of the edge of campus.  He for the first few years had another job and used a repair service for stuff and then every summer he did paint /repairs.  but for atleat the past 20 years he and his wife do it all.  He spends the summer doing touch up painting on a room by room basis.  And about every 5 years does hire a firm for a make over.  Aside from renting them out in the Fall and getting the kids out at the end of the term  he has a very quite life.  A few clogged drains, lost keys and kids that don't pay ontime.  My best guess when school is in sesssion aside from collecting rent he works 10 hours a week but when its summer I know both of them paint and clean over 84 hours a week each.  He has far mare spare time than I and just spent 2 months on vacation in Europe. He net worth now well over 10 million I am sure.  Interesting life style.  It helped a lot when he started that parents backed him with downpayments.   Their  son helps them  not as we  are not quite as young as we were then.  I doubt that he would take on any work for any one else. 


2 years for him, X number of years renting it.

 

It's a smart play financially IMO if you can swing it in a place whose demand isn't going to see a decline for a while (near campus).

 

I recently did the UCI thing, and while it fell apart for other reasons if I could've swung it as a second home (sadly only 36 miles away even if it takes me 2-3x as long to drive that as most places in America) wasn't lost on me I could've easily turned $2300 or so in rent 9 months of the year and broke even on 3 on a $1100/month mortgage without trying hard and basically would've been getting ballpark 6.75% or something similar and that's figuring $500/month simply lost to rental upkeep.  That's current market, and I don't see living expenses at most colleges going down anytime soon, rents will likely continue to levitate as long as there's pent up demand.

 

Rental opportunities in high demand areas that have lots of turnover like colleges can be solid, especially since most people are looking at the short term economics from my viewpoint.  If you can swing it, I'd do it personally, but run the numbers yourself to see if it makes sense... college students aren't exactly awesome tenants so make sure to keep a healthy SWAG for repairs and what not.  If I were underestimating the cost of upkeep and it was more like 12K/year instead of 6K/year, that drops my profit by a lot for example, but can probably find some statistics from other landlords at various universities and get an idea.  Sounds like UMD students expectations of a nice place aren't as high as UCI's student population who will pay for something better haha.


When you went to UCL, was it a party school?


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