Student housing is one of the most promising and popular investing in property business industry. Of course, it is kind of a higher level of property investing due to its higher demand and rent amount. When investors decide to invest in student housing, they need to dedicate their time to a higher level because of that. Thus, even though this is promising investing there are still many investors who are discouraged to do it. Student housing is an investment when the property is located near college or university so that the student who is attending the nearby campus rent it. This investing has a specific market but still promising because education is important in life and the number of students never decreasing.
Possible difficulties you find when investing in student housing
There are many benefits you can earn from investing in student housing. It includes a higher rent price, never-ending tenant, higher resale value, etc. However, there are also risks or difficulties which make some investor stay out of student housing. Here are possible hardships you face when student housing:
- The annual turnover of student housing is considered more stressful than normal property investing. In student housing, you will have to deal with quite an intense turnover. For example, you have to deal with senior students where they will only need to stay for one year in your property. Thus, you have to start searching for new tenants at least every nine months. Finding tenants in student housing is easier but the process of finding the right tenants can be stressful. The constant turnover is what makes many investors stress the most.
- Property damage and maintenance also issue that student housing investors should deal with. It is not a secret that student housing investor should look out more for property damage and excessive repairs. You may need a large deposit to provide a large level of protection. However, most investors are often stressed out due to minor things such as running toilets, clogged drains, cracked windows, or neglected appliances. They might look minor but are costly to repair.
- The next challenges you will face when investing in student housing are regulations and guidelines. You must know that most college towns often have fairly strict rental rules and guidelines to follow. You need to find the right way to be allowed to rent your property to the students. There is a possibility that the town already closed the application window for the year and even permanently. Even if you can apply, you still need to go through the long process. Your property will have to pass a series of guidelines and regulations.
- Another challenge that the investor might have to deal with is the annual fee. In addition, there is also constant town scrutiny to deal with. This is because the town should protect the living enjoyment for all property owners. Thus, you will have to monitor your property condition constantly. It even includes noise and parking regulations. It shows that student housing investors or landlords have a lot on their plate.
There are various types of property investing and one of them is student housing. This particular investing has become more popular over the years. This is property investing which focus on the specific market, students. In real estate investor world, student housing becomes popular for many reasons. Student housing means the property is located near a university or college where most population students exist. The property is rented out to students who are attending the nearby campus. The demands are averagely high. It is known that the rent amounts are higher as well. The time needs to dedicate is higher as well. Thus, it is safe to say that this type of investing is not for every investor. You might as well consider many things before jumping in this investing.
What you need to know about student housing
Many investors interested in trying this specific property investing is due to its promising benefits. Remember that education is one of the most important elements of life. People pursue education to have a better life. Thus, the number of education facilities keeps increasing. It leads to promising benefits for student housing business. Here are positive things that might make you interested in student housing investing:
- The location of student housing property is nearby college or university. It means it has an ideal location which is one of the most important factors which can lead to success in property business. with an ideal location, the rent increased. Most students prefer local housing located near the campus they are attending to make everything easier for their education. With this high demand, you can increase the rent price and charge 10-20% more than normal circumstances. This is promising for your cash flow. That is why lots of investors are interested in this type of investing.
- Students will constantly need a place to live as long as they attend their university. Therefore, the demand will keep high in this investing. Even though your old tenants have finished their education and move out of your property, you will have a high chance to fill it again with new students. The cycle is promising that you don’t even have to worry about finding the deal. You just need to make sure to choose the right tenants. You can even find new tenants through word of mouth. It is common for student housing investor to rely on student referral to keep getting their property filled in.
- The resale value of student housing property is higher. Of course, the most benefit to earn form student housing investing is monthly income. However, there are also long-term benefits you can earn from student housing. It is when you decide to sell your property. The value will be increased. You can put the document on the listing so that the prospective owners will be able to sneak a peek of what kind of property you have. When you have higher rental amounts, it will lead your sales price upwards. With high profit you earn, you can even start new investment to expand your business.
When you own an asset in a form of property, there are many things you can do either to sell it or rent it out. By renting it out, you will earn a steady income each month. By selling it, you may earn a higher profit so you can even purchase another property for your next investing. However, selling a property can be challenging as well. There are different methods you need to choose and the process can be also overwhelming if it’s your first time. No wonder that many homeowners and investors hire a professional broker to help them deal with the selling process. It is a good decision since it makes everything more efficient.
Points to consider in selling the property
There are procedural processes when it comes to selling a property. Every transaction in property business should be taken legally since it is protected by law after all. The process of selling property includes property evaluation, hire property agent or broker, decide the method of selling, advertise your property, wait for potential buyers, and close the deals. After understanding the process of selling a property, you need to know as well important points to consider when it comes to selling a property. Here are they:
- The purpose is an important point when you decide to sell your property. It is highly recommended to think of the reason why you need to sell your current property. If you decide to sell it because you want to use the profits to grow your business then it is reasonable to do it. However, you may be challenged with the market dynamic at this point. The proposition is tricky in the market. One thing for sure is that you have a clear purpose after selling your property which is to turn it into other properties or something that can help you generating future business.
- Next point to consider is rental property costs. Remember that when the time goes by, your property is getting old. There is a possibility of something happen to it. For example, the older your property is, the more repairs need to be done. Any damage to the property will influence the value of it. Therefore, you need to take action and start finding the right way to sell your property once it becomes a burden than an asset to you. Then, you can move on to the next property to invest in.
- The dynamic of the market keeps changing. It influences the interest rates or loan programs. As the result, it will also change the level of buyer demand. However, it is more important to find the list price that you are most comfortable instead of waiting for the market. It is important to watch the bottom line. However, you will know that it is not worth holding out for the maximum sales price in the market. The market is an important point in selling the property but it is not the ultimate consideration. It is one of the factors you should consider to make a decision that won’t make you regret later.
For investors or homeowner, the property is a valuable asset so selling it would be a challenging process. No wonder that many investors even rely on professional property broker to help to decide what kind of method that should be used to get the best deal. Some investors do thorough calculation and estimation a show they sell their property the right way so they won’t suffer from loss and give the buyer satisfaction at the same time. Determining the best price before selling it is a must. However, it is highly recommended to set the best price both for the seller and buyer. When you set unreasonable price, it is highly possible that the buyers are not interested.
Finding the best time to sell your property
Back to finding the right time to sell your property, here are some important factors you may need to consider before making any move:
- First is the cash flow which has a powerful impact on your bottom line. However, you shouldn’t only rely on the rise of the price because it holds less impact on your bottom line. Thus, you may need to calculate everything first. However, it is possible that even after all the closing costs and other expenses, it turns out that the bottom line isn’t as great as you thought it would. When this happens, it is highly recommended to hold on your property instead of selling it. You can rely more on your monthly income from renting it out. This type of cash flow is safer. It is because rising home prices can also lead to higher rental demand. Thus, it may earn you more benefits.
- Next is the real estate market which keeps growing each year. Keep in mind that your decision to sell your property will also be based on when you bought it as well as how much the equity you have. This is why you need to predict the market before selling your property. Once you have a thorough look through the market, you will have a better vision as to when you can hold or sell your property.
- The next factor is expenses. When it comes to selling, the expense can be high or higher. It is due to real estate commission, taxes, as well as other closing costs. Those will impact your bottom line. If you consider selling, the number should be accounted for. Thus, it is also possible to wait for another few months so the price will be higher to sell.
It is important to find the right time to sell your property so you get the best deal. Besides, you will need time to consider what kind of method you should choose so that your property will be sold quickly at the best price. There are various methods you can decide. Or, you can ask the professional broker to help you choose the right method. Two common methods in selling property are through private sale and auction. Both have different challenges and benefits so you can take your time and chose the best method you are most confident with to use.
House hacking is one of the promising investing strategies in real estate business. This is especially suitable for new investors who want to start investing but still don’t know what to do. This is a good start in property investing because then you don’t have to jump directly in property investing world. You will learn everything steps by step by being a good landlord first. However, you will still earn your passive income each month while slowly learning more about property business. Thus, you also have more chance t save up for next investment when you are more ready to start investing in higher scale than house hacking.
Challenges in-house hacking
Every business has its challenges and problems. This investing is a great strategy especially for new investors who haven’t purchased their own home yet. House hacking is also not only for those who live in the multifamily property but also those who live in the single-family home. However, house hacking also has some challenges you possibly have to face once you decided to start this strategy. Here are some of them:
- House hacking will be much more challenging if you are the type of person who cares so much about personal space. Having tenants living your next door doesn’t mean your personal space will be constantly invaded. However, it may reduce the sense of personal space and it may make you uncomfortable. However, this shouldn’t be a problem if you make clear lines about how you as a landlord and your tenants live peacefully side by side (in the same home or same building but different unit).
- You haven’t had the experience to be a landlord so you don’t exactly know what to do when there is tenant live next to you. This issue can be solved if you are willing to learn how to be a good landlord. You can read articles or book about property business so you will know what to do. You can also ask your friends or families who are landlords.
- Finding a good deal can be a challenge especially in the beginning when you still figure everything out. However, this is actually not a challenge for house hacker only but also for many investors. It is important for you not to go in a rush. You can do some research first about how the property market around you first before everything. Thus, you will have something to help you figure out how to find the best deals. It is also important to calculate your numbers so that you won’t make the wrong step.
- You have trust issue so it is harder for you to find ‘good’ tenants. It is indeed important to find good tenants. Because you just can’t rent out your house to tenants in a bad manner. You may need to learn more about tenant screening process to find the best tenants. Thus, you will be happily and peacefully live side by side. Make sure you try to get to know more about your potential partners before making any deal.