Learn About Real Estate Investing
Using Student Rental Properties

When you are going to learn about real estate investing you definitely want to hear this debate...

You'll hear two drastically different sides when chatting about student rental properties.

There's one group of investors that absolutely love them. They are the be all and end all of their real estate portfolio and nothing can come close.

And then there's the group that has owned them and will never touch one again!

Hmm...why such different opinions on this type of residentail real estate investing?

Most student rental houses cash flow extremely well. Because you may have four, five, six or seven students sharing one house your monthly rental income is nice and high.

Definitely higher cash flow than if you rented out the house to a single family. I know one investor who has 9 students in one single family home...nine! (done by the book, with permits by the way).

His positive cash flow on this property is approximately $1,000/month.

So with nice high cash flows some investors are attracted to these homes.

"Yeah, but what's the whole story?"

You've already guessed it I'm sure.

Student rentals require hands on management. Compared to regular single family home rental properties these have more maintenance issues and sometimes awkward vacancy challenges.

With five, six, seven, even 9 students in one house there are going to be times when you have to deal with a broken window, door, light fixture, lock, tap etc..

Also, with so many people in one house the wear and tear is pretty high on student rentals.

Another thing to keep in mind when you learn about real estate investing is how you will handle vacancies.

And if one student can't stand another after a few months they may just pack up and leave (I'm speaking from first hand experience here). If they break the lease and walk out you're only real recourse is small claims court. And it's always the smallest bedroom that you are left with to try and rent out.

The rent on that one room may be the difference between having a positive cash flowing property and a negative one.

It can be difficult to find a student who wants to move into a house where they don't know anyone, right in the middle of a term.

You can get a good idea about the prices paid by students for housing by checking out the college or university housing website. They all have them.... click here for an example of the McMaster University's in Hamilton, Ontario.

When you learn about real estate investing ask around until you get some "on the streets" feedback from actual investors about their management experiences and systems.

I know people who have 20 single family homes and manage them by themselves on a part time basis. With 20 student rental properties it will be a full time job for you or you'll have to use a property management company. Guaranteed.

Also, another thing to learn about real estate investing is that the mortgage programs can change at any time.

For example, financing student rental properties in Canada has gotten more difficult. You have to put much more as a down payment and some banks just flat our refuse to finance them.

Seems the Canadian banks and mortgage insurers don't want anything to do with houses that have a bunch of young adults drinking and partying in them at all hours of the day. They're busy making buckets of much money elsewhere. They don't need the hassle.

Because of this when you sell the property you will be looking for a certain type of investor that wants that specific type of property and can navigate the financing waters to pull off the deal.

And if you want to refinance the property it can be more difficult because of what it is being used for.

So heads up....I wasn't aware that refinancing may be an issue until I actually tried to do it one of my own.

The mortgage programs had changed from the time I purchased the property and there were a lot less options available.

Although the cash flow is nice and high on a student rental property my preference is single family homes.

Something to learn about real estate investing with single family homes is that when they are rented out as single family homes they can me much more flexible to you from a resale and refinance perspective.

As discussed the monthly cash flow will likely be less but the appreciation, tax benefits, and equity build-up will be just as strong or stronger. And a portfolio of single family rental homes make for a very solid real estate investing foundation.

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