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Also, remember that just because you are getting the mortgage paid by students renting, you are also incurring your own costs living in the dorms - they are not cheap. It almost sounds it would be a better option long term and income wise to put that money back into the house, and rent out the remaining bedroom, for 2 reasons. One, rental properties on average require much higher levels of maintenance - these people will not own the house, and so often times the quality of care they put forth will be less. If you actually plan on living in the house someday, If it was me I would feel more comfortable physically living in the house myself. If you plan to forever keep it a rental property, this may not be such a big factor for you.
What will you do during the months school is not in session to cover the rent costs? Its hard to guarantee that students will stay in town for the summer months.
Lastly.... if you are serious about this, it is worth it to put down at least 10% downpayment, otherwise you will be subject to the insurance penalty.
Will the tenants be responsible for the utilities?
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Calling from deep in the heart, from where the eyes can't see and the ears can't hear, from where the mountain trails end and only love can go... ~~~ Three Rivers Hare Krishna
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