Rental property

[JD]

Scoop,

I've recently become interested/able to purchase some rental properties.  I was wondering if any of you have any of your own?  Particularly do any of you own rental properties on college campuses?

Reason I ask is there's a property I have my eye on, however I'm not sure if being near MU campus would be a benefit, or a not.  I'd think steady income from students would be great, but what about the other 4 months out of the year?

I appreciate everyone's input.

Thanks

[real chili 83]

Scoop,

I've recently become interested/able to purchase some rental properties.  I was wondering if any of you have any of your own?  Particularly do any of you own rental properties on college campuses?

Reason I ask is there's a property I have my eye on, however I'm not sure if being near MU campus would be a benefit, or a not.  I'd think steady income from students would be great, but what about the other 4 months out of the year?

I appreciate everyone's input.

Thanks

Why 8 months?  Make them sign a year lease.  If I understand correctly, some landlords at MU write leases so that most of the rent is due when students get their student loan payments   They get two large payments twice a year.  Cash flow heaven. 

[warriorchick]

Why 8 months?  Make them sign a year lease.  If I understand correctly, some landlords at MU write leases so that most of the rent is due when students get their student loan payments   They get two large payments twice a year.  Cash flow heaven.

I have never heard of this twice per year arrangement, and I am not sure why anyone would sign it unless some sort of discount were offered.

Also, nearly all of the landlords require full year leases. It is becoming more and more common for students to stay on campus over the summer, so it really is not a big deal.

[dgies9156]

Make sure you do your due diligence before you go too far. The key questions are how much supply of rentals is there (and whether the university is using a lower cost of capital to acquire and subsidize its owned units).

Second, what's the condition of the building? The administration and maintenance headaches of the building can be extreme. What condition is the building in now and how long will it be until major roof, HVAC and plumbing/e;ectrical needs will be met?

Unlike a commercial building, you get turnover every year. Nonetheless, what's the occupancy been during the past three years, how are students being marketed?

Finally, does the building offer amenities? If so, what?

[warriorchick]

Make sure you do your due diligence before you go too far. The key questions are how much supply of rentals is there (and whether the university is using a lower cost of capital to acquire and subsidize its owned units).

There are no plans for the University to acquire or build new apartments in the foreseeable future that has been publicly discussed, so that is not really a factor. They also charge market rates for the units they currently have.

There are several developer/managers that have taken an interest in the Marquette area.  There have been several upscale properties built within the last few years.  At least property owner has knocked down an existing apartment building of theirs to build a bigger, better one.  Another has made arrangements with several sororities and fraternities to build very nice houses for them in exchange for long-term leases.  It is my feeling that Marquette has decided that the private market is doing a more than adequate job of providing apartments for students, so there is no need for them to devote their own capital.

[GGGG]

Many campuses do the twice a year arrangement.  Similar to a residence hall.  But I would mirror what the local market dictates.

And prepare to set aside more than usual for upkeep and repair.

[4everwarriors]

Ya gotta get large 'nough ta have a manager. Utterwise, you bee truckin' over ta 15th and Kilbourn at 2 am to unplug someone's chitter, hey?

[Jay Bee]

Bee deskreet when ur instawlin the cameraz. ZFB kin help, u I'm really a badger fanl?

[brewcity77]

My wife and I have been thinking about it. The Milwaukee Rec Center is running a workshop next month on buying rental properties. Go to this link and search "property":

https://web2.vermontsystems.com/wbwsc/wimilwaukeewt.wsc/search.html

No idea if it's any good, but if you live in the city it's only $8, so seems like little harm. I know a friend who is looking for 2 and 4 families with a small group of investors to try to make a manager viable. I definitely think there's benefits to either buying multiples or teaming up so you can get someone else to do the dirty work.

[jficke13]

If any of you guys end up getting in the landlord tenant game and need help of the... erm.. lawyerly persuasion... I know a guy who can do you a deal. Trust me, landlord tenant afternoons in Milwaukee Small Claims is nowhere you want to be.

[MU82]

asd.lfuawdr87q4mkva/sd fuqawomfa ;er adfm.

Right, 4ever?

[4everwarriors]

Couldn't have said it any better my own self, Nads, hey?

[rocket surgeon]

Ya gotta get large 'nough ta have a manager. Utterwise, you bee truckin' over ta 15th and Kilbourn at 2 am to unplug someone's chitter, hey?

you can say that again-i managed jerry hegarty's building(above his drinkin establishement) for 4 years while in dental school.  the money was great(free rent) but the headaches?  back then, i was young and energetic.  fire extinguisher discharge sucks to clean up.  locked out of apartments, noise, yup that kind of noise too-lots of religious stuff-oh God oh God, etc , vomitus,  i had to look for a person who hadn't been seen in a while-tripped over her body-found her!  got into a fight with a "homeless" guy-those guys can be kinda nasty. 

if you get a good manager-then all that stuff no matta i guess

perk-lloyd walton was a tenant for a while-great guy!

[brewcity77]

you can say that again-i managed jerry hegarty's building(above his drinkin establishement) for 4 years while in dental school.  the money was great(free rent) but the headaches?  back then, i was young and energetic.  fire extinguisher discharge sucks to clean up.  locked out of apartments, noise, yup that kind of noise too-lots of religious stuff-oh God oh God, etc , vomitus,  i had to look for a person who hadn't been seen in a while-tripped over her body-found her!  got into a fight with a "homeless" guy-those guys can be kinda nasty. 

if you get a good manager-then all that stuff no matta i guess

perk-lloyd walton was a tenant for a while-great guy!

Personally, I wouldn't want to have anything to do with college kids. Sure, you'll always have tenants, but you'll also always have headaches. I'd look towards the outskirts of the city. West Allis, Wauwatosa, Bay View, Garden District (NOT Garden Homes neighborhood), Franklin, St. Francis, those types of areas. Likely get a higher quality of tenant, longer-term tenants, and better cared for properties.

[warriorchick]

Personally, I wouldn't want to have anything to do with college kids. Sure, you'll always have tenants, but you'll also always have headaches. I'd look towards the outskirts of the city. West Allis, Wauwatosa, Bay View, Garden District (NOT Garden Homes neighborhood), Franklin, St. Francis, those types of areas. Likely get a higher quality of tenant, longer-term tenants, and better cared for properties.

Speaking as someone who has worked for property management companies, it's a toss-up.  The kids are probably going to leave your property a mess, but there are far fewer collection headaches. Mom and Dad are usually paying the rent. 

And if you think you are going to avoid eviction and property damage hassles by owning in a "nicer" neighborhood, think again.  My brother had to sue a former player for the Tennessee Titans because he caused tens of thousands of dollars in damages to the house he rented to them, as well as several months of unpaid rent.

[jficke13]

[..]  i had to look for a person who hadn't been seen in a while-tripped over her body-found her!  [...]

You found a dead body above Hegarty's?

[jficke13]

Anyway, in all seriousness though, one of my clients is a fairly big management company around SE Wisconsin. You own, they manage the property, find tenants, do maintenance, collect rent, etc., and my firm writes the lease and, if necessary, evicts and collects unpaid rent/damages.

I'm not positive on the arrangement between property owner and manager, but I've heard 1 month's rent is a fairly common rate. In my opinion, it's not a bad deal at all.

I'm happy to give more details if anyone's interested.

[real chili 83]

Anybody rent from Brenda Star?

[4everwarriors]

Rent watt, hey?

[keefe]

I wouldn't mess with college students - I cannot think of a more problematic tenant population.

We bought a few houses on Seattle's eastside which I rent out to Microsoftees. H1B tech workers are well paid, tend not to have kids, and are reluctant to purchase a house for at least three years until they ascertain their long term status in the US.

They are responsible tenants who sign multi-year leases, pay promptly, keep the property clean, and don't bother the neighbors. Unlike college students they don't punch walls, vomit everywhere, have wild ass parties, and leave the kitchens and bathrooms hazmat cleanup sites. 

[keefe]

Rent watt, hey?

Fighter Pilot Life Rule #2 - The Three F Rule:

If it Floats, Flies, or...uh...Fornicates it is cheaper to rent.

 

[#UnleashSean]

If you want to go the college direction.

A September to may 16th (or whatever date college ends) is one Lots of college students look for. You can charge more per month as they still save in the long run. Then finding students for summer school is also usually easy enough.

The other lease option is the normal full year. Charge a bit less per month but not have to worry about clean and repairs twice a year.

Students can be great and bad. You'll rarely have to deal with payments but have to deal with crapty cleaning and repairs.

[Benny B]

I'm not really an expert in student housing anymore, but it was my daily paycheck for several years... but I will say this, renting to students is very different than renting to families.  Whatever seminar you hear on the radio for making money as a landlord or book you're reading about building wealth in rentals, keep in mind that perhaps 60-80% of what they'll teach you won't be applicable if students are your target market.

In fact, when I talk about SH, I'm talking about the buildings with hundreds of beds... the smaller stuff I refer to as "student rentals."  I make the distinction because institutionally-owned SH is on a completely different plane than the townhomes, duplexes, 4-plexes, etc. on/near campuses.  So even when someone starts talking about how SH is one of the most sought-after product types amongst major real estate investors, understand that they're not talking about student rentals.

The biggest difference between student housing, student rentals and "traditional" rentals: trad rentals go by the apartment, unit, house, etc... the lessee controls everything behind the entry door.  Student housing - by contrast - is almost always rented by the bed, the same way the school rents their own on-campus housing.  SR can be rented by the bed or it can be rented to one student (who then sublets the rest of the space) or the entire house can be rented to the 3, 4, 5+ students that are going to be living there.

As a landlord, intuitively it might make sense to rent to one person and put them on the hook if their friends turn out to be deadbeats, but if the student doesn't have the coin to cover the share(s) of rent from his buddies who dropped out (or decided to go live somewhere cheaper), going after him personally for the entire rent may be a small claims sh|tshow... sure, if his parents have deep pockets, you don't have to chase down the deadbeats, but in most cases it would have been better to simply fill the bed instead of having to evict everyone in the unit.

So as a SR landlord, you need to make the decision as to whether you want less risk or more control.  It's not always an easy decision, and what might seem like the right decision one year might be the wrong decision the next... sometimes you can't be picky as a landlord and have to rent to whoever is willing to sign the lease; other years you'll have so many interested renters that you can run complete background and credit checks.

Last thing I'll say is that just like McDonald's franchisees... landlords will never get rich owning a single rental.  It's not a bad idea to start with one property, but unless you're buying your next property within a few years, you're quickly going to find that there are other places you can get the same growth/income returns on your money without the hassle of being a landlord.

[rocket surgeon]

You found a dead body above Hegarty's?

well around the corner in the old section-yes.  she was one of the last original original tenants from the 60's-70's, widowed, etc  hadn't picked up her mail in a few days, drapes all closed, dark as hell, before i could reach for the lights or open the drapes, i tripped over her.  the apartments above hegs were the newer ones-i got to live in one of them

 

[augoman]

PM me and I will share my personal experiences.

[GGGG]

PM me and I will share my personal experiences.

Eeewww....

[reinko]

Speaking as someone who has worked for property management companies, it's a toss-up.  The kids are probably going to leave your property a mess, but there are far fewer collection headaches. Mom and Dad are usually paying the rent. 

And if you think you are going to avoid eviction and property damage hassles by owning in a "nicer" neighborhood, think again.  My brother had to sue a former player for the Tennessee Titans because he caused tens of thousands of dollars in damages to the house he rented to them, as well as several months of unpaid rent.

Vince Young, gotta be Vince Young...maybe Pacman

[JD]

Thank you everyone for the feedback, I really appreciate it.

I understand what Benny is sayin'.

The unit I found has 6 bedrooms, 4 baths.  I wasn't sure if it would be more beneficial to rent it per room like a 2040/The Marq has done, or find a group of bros and rent it to them similar to what my friends and I did once.

[mu-rara]

Anybody rent from Brenda Star?

She owned a lot of property around where I rented. 

How about Leo Wisniewski?  He loved renting to students and almost demanded rent up front.  He also loved renting to those on the gubmint assistance.  Gov't rent check went directly to him.

[warriorchick]

Thank you everyone for the feedback, I really appreciate it.

I understand what Benny is sayin'.

The unit I found has 6 bedrooms, 4 baths.  I wasn't sure if it would be more beneficial to rent it per room like a 2040/The Marq has done, or find a group of bros and rent it to them similar to what my friends and I did once.

From talking to my kids' friends, it appears that "houses" are in very high demand, and that kids start looking for them a year ahead of time.  I would rent it as one lease.  Why hassle with having six separate units to rent? The only reason 2040 does it the way they do it is that they were having trouble renting entire apartments.

[ZiggysFryBoy]

From talking to my kids' friends, it appears that "houses" are in very high demand, and that kids start looking for them a year ahead of time.  I would rent it as one lease.  Why hassle with having six separate units to rent? The only reason 2040 does it the way they do it is that they were having trouble renting entire apartments.

6 different parents with homeowners insurance to go after when Timmy, Jimmy and Doug hit a sprinkler head with a football, or when Chad microwaves a bird and starts a fire.

[warriorchick]

6 different parents with homeowners insurance to go after when Timmy, Jimmy and Doug hit a sprinkler head with a football, or when Chad microwaves a bird and starts a fire.

You would have that anyway if all six kids were on the same lease. Plus you could word the single  lease so that there is joint and several liability, which is better than having a separate lease with each tenant.

[Benny B]

6 different parents with homeowners insurance to go after when Timmy, Jimmy and Doug hit a sprinkler head with a football, or when Chad microwaves a bird and starts a fire.

This is a classic example of landlord folly... sure, you've got six guys to go after, but do you even want to?  While suing six guys doesn't cost 6x what it would cost to sue a single person, it can make things up to six times more complicated unless someone fesses up and makes good.  Alluding to what I said before, having to chase down one deadbeat renter, let alone six, can be a tremendous time sink, not to mention if you're not collecting rent during that time (e.g. the damage is too costly to fix, the lessees haven't been evicted, personal property hasn't been removed, etc.) it can quickly become a money drain for a landlord who owns a single rental property (i.e. owners of multiple properties don't have all of their eggs in one basket in case something goes south).

Maximizing your chance of winning a lawsuit has the unfortunate side effect of maximizing your chance of going to court.  Absolutely you need to protect yourself as a landlord, but you also want to protect your own time by making good decisions on the front end, which begins with the proper screenings, payment structure, and administrative strategy. 

Unfortunately, there aren't any hard and fast rules, but I will give one example of what I mean by admin strategy... a landlord I know owns several duplexes and spends every Saturday morning spring to fall mowing the lawns at each of the properties... when I asked him why he didn't hire a landscaping service to do it for him, his response was that he used to, but he noticed that tenants took much better care of the property when they saw him every week.  He figured that spending the 125-150 hours a year mowing lawns was probably saving him 40-50 hours/year in small claims court.... to him, that trade-off was well worth it.

[jficke13]

This is a classic example of landlord folly... sure, you've got six guys to go after, but do you even want to?  While suing six guys doesn't cost 6x what it would cost to sue a single person, it can make things up to six times more complicated unless someone fesses up and makes good.  Alluding to what I said before, having to chase down one deadbeat renter, let alone six, can be a tremendous time sink, not to mention if you're not collecting rent during that time (e.g. the damage is too costly to fix, the lessees haven't been evicted, personal property hasn't been removed, etc.) it can quickly become a money drain for a landlord who owns a single rental property (i.e. owners of multiple properties don't have all of their eggs in one basket in case something goes south).[...]

Chick mentioned joint and several liability, and it's a magical thing. I don't care if Chad, Steve, and Jerry are pointing at each other to explain the microwaved bird, the bird is microwaved and the kitchen smells like guilty badger, so I'll take my judgment and figure out which pocket to collect from later thank you very much.

Doing the litigation thing isn't too tough if you hire a lawyer to do it for you.

[Benny B]

Chick mentioned joint and several liability, and it's a magical thing. I don't care if Chad, Steve, and Jerry are pointing at each other to explain the microwaved bird, the bird is microwaved and the kitchen smells like guilty badger, so I'll take my judgment and figure out which pocket to collect from later thank you very much.

Doing the litigation thing isn't too tough if you hire a lawyer to do it for you.

You're completely missing the point.  It's not about being about to pin someone with liability... that's easy; collecting on a judgement (potentially from a penniless, recent college drop-out who lives out of state) and/or avoiding downtime is completely different story.

If you own multiple properties... sure, it's helpful to have a good lawyer.  But any landlord's #1 goal - especially a single-property landlord - is to stay out of court to begin with.

[jficke13]

You're completely missing the point.  It's not about being about to pin someone with liability... that's easy; collecting on a judgement (potentially from a penniless, recent college drop-out who lives out of state) and/or avoiding downtime is completely different story.

If you own multiple properties... sure, it's helpful to have a good lawyer.  But any landlord's #1 goal - especially a single-property landlord - is to stay out of court to begin with.

Given the number of repeat offenders I see in court every afternoon, slumlording and ending up in Milwaukee County small claims isn't that big of a drawback to their business. Granted, you as a landlord don't want to pay me, the scum-sucking lawyer, but my fee is no different if I handle 1 property or 40. It's a cost per eviction and a cut of the collection if you want me to collect on the money judgment I get as part of the eviction. It's a purely linear equation. You're not better off from a fee perspective if you have lots of units compared to just one or two (caveat if you have LOTS of units... maybe).

And collecting from MU students is a pretty decent proposition. Most don't drop out. I can keep a judgment active in Wisconsin for 40 years, and transfer it to other jurisdictions if necessary too. The population of MU students are *significantly* more collectible than my typical defendant. I'd take the average MU drop out as "collectible in the next 40 years" vs. the population of evictees if I had to.

[Skitch]

She owned a lot of property around where I rented. 

How about Leo Wisniewski?  He loved renting to students and almost demanded rent up front.  He also loved renting to those on the gubmint assistance.  Gov't rent check went directly to him.

That guy was scummy. Found him once walking out of our empty apartment when I came home and woke up once to him showing it to prospective renters. It wasn't even our unit they would be renting but the one they were going to get was being repaired.

[augoman]

Eeewww....

not those, Sultan, only relative to investment property.

[Benny B]

Given the number of repeat offenders I see in court every afternoon, slumlording and ending up in Milwaukee County small claims isn't that big of a drawback to their business. Granted, you as a landlord don't want to pay me, the scum-sucking lawyer, but my fee is no different if I handle 1 property or 40. It's a cost per eviction and a cut of the collection if you want me to collect on the money judgment I get as part of the eviction. It's a purely linear equation. You're not better off from a fee perspective if you have lots of units compared to just one or two (caveat if you have LOTS of units... maybe).

And collecting from MU students is a pretty decent proposition. Most don't drop out. I can keep a judgment active in Wisconsin for 40 years, and transfer it to other jurisdictions if necessary too. The population of MU students are *significantly* more collectible than my typical defendant. I'd take the average MU drop out as "collectible in the next 40 years" vs. the population of evictees if I had to.

Ugh.  This is why I laugh at universities that offer joint JD/MBA degree programs... at some point between the LSAT and the bar exam, every container of business acumen in a law student's brain is emptied, burned and the ashes encased in concrete.

Again... if I have one rental property, I can't afford to be engaging an attorney; it's not so much because an attorney doesn't provide value (most do), but rather, it's because whatever situation necessitated my having to engage an attorney is likely cutting into my only source of revenue.

IOW, it's correlation, not causal.

[mu-rara]

That guy was scummy. Found him once walking out of our empty apartment when I came home and woke up once to him showing it to prospective renters. It wasn't even our unit they would be renting but the one they were going to get was being repaired.

I would describe him as a character.  We didn't have any of the issues you had.   

When were you renting from him?   We were 80-82.

[Skitch]

I would describe him as a character.  We didn't have any of the issues you had.   

When were you renting from him?   We were 80-82.

95-96

[jsglow]

Given the number of repeat offenders I see in court every afternoon, slumlording and ending up in Milwaukee County small claims isn't that big of a drawback to their business. Granted, you as a landlord don't want to pay me, the scum-sucking lawyer, but my fee is no different if I handle 1 property or 40. It's a cost per eviction and a cut of the collection if you want me to collect on the money judgment I get as part of the eviction. It's a purely linear equation. You're not better off from a fee perspective if you have lots of units compared to just one or two (caveat if you have LOTS of units... maybe).

And collecting from MU students is a pretty decent proposition. Most don't drop out. I can keep a judgment active in Wisconsin for 40 years, and transfer it to other jurisdictions if necessary too. The population of MU students are *significantly* more collectible than my typical defendant. I'd take the average MU drop out as "collectible in the next 40 years" vs. the population of evictees if I had to.

[jficke13]

Everyone needs a hero.

[jsglow]

Everyone needs a hero.

You need to do student T shirts like Gruber.  That is unless you ARE Gruber.

[jficke13]

You need to do student T shirts like Gruber.  That is unless you ARE Gruber.

Gruber is yesterday's news. Gotta get on board with TDLS - the If You're In Pain, We Make It Rain guy.

[jsglow]

That's AWESOME.  That dude absolutely has to sponsor MU hoops with our 3 ball shooters.

[jficke13]

He was in my law school class, he's got more advertising hits:

[jficke13]

He's got another one that says "Just because you did it doesn't mean you're guilty" that didn't come up when I googled. That's my personal favorite.