bsbllplyr1234

ooh

Manic_Skafe

You most certainly are naive if you'd take advice on a $125,000 purchase from anyone but the most qualified professional who's fully abreast of the entire situation here.

How's about we talk you through heart surgery instead?

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bsbllplyr1234

wasn't exactly helpful, Im looking for somebody who can help me get started- I will consult a professional when I get closer to the purchase...

eribrav

Two inital thoughts:

First, mortgages are not so easy to come by these days. You may need more of a down payment.

Second, I remember what I was like at 18 and I can say owning a house would not have been a good idea for me. We own one now and it's a big responsibility. It consumes a lot of time and a lot of money. There's probably other things you will be focused on at 18.

Just my thoughts.

PonyPotato

"$3,000 in case someone flakes out or there is an emergency."

Do you mind me asking how you are paying for college? Money evaporates during those years, and believe me - a broken furnace, A/C, water heater, bad plumbing, etc. will chomp big chunks out of that $3,000 pretty quickly. What if you rent to people who have no respect for your property and destroy the place? What local lawyer are you going to talk to to draw up a lease agreement, etc.?

Your idea is all nice and pretty when you look at it positively, but you really don't need that extra responsibility or financial obligation while you're in college. I would never want a student younger than me as a landlord.

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jewels

Sounds as though you've given it lots of thought. My only question would be about income. I'm not a mortgage broker, but I would wonder if you'd qualify for the loan without a stable income. Although you must likely could rent it if it's close to a college campus, is there any way for you to prove it's a guaranteed income and that you can afford to maintain it?

If you have already qualified, then more power to ya. Real estate investments at such a young age? Wish I'd have started when I was your age.

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Bear Cub

I agree with Jewels. Banks are becoming might conservative with who they give loans out to, and I can't imagine 18 and 19 year old college students at the top of that list. Do you have somebody lined up as a co-signer? What sort of income do the two of you have outside the rental? Have you factored in insurance costs, etc? Have you checked for school requirements? Many schools are now working with the towns to mandate who gets to rent out properties to college students, and the landlords have to be on a preapproved list. It establishes minimum health and safety standards, and protects the students from getting the shaft.

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amonkie

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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Randerolf

NoSoup's Guide to Buying a Property might be helpful to you. (It doesn't come up in a search for some reason.) Good luck.

snowy

The norm here in my college town is that houses are only available with a year-long lease; tenants are responsible for paying rent even in the summer months, regardless of whether they stay there or not. Also, houses typically come with no utilities--the tenant is responsible for all of them, and a landlord can specify in the lease agreement that the tenant is responsible for everything, including required garbage service (this was in my last lease).

Personally, I think you're going about this backwards, bsbllplyr. You need to meet with a loan officer or mortgage broker and see if this is even feasible. Given tight credit markets, I think it's unlikely you'll be able to swing this if you're not living in the house yourself and don't have a steady, documented income. Personally, I'd choose to live in the dorms for a year for the experience instead, save up more for a downpayment, and revisit this idea a few months from now by meeting with a mortgage broker, while seriously considering living in the house myself. Amonkie is absolutely right when she says tenants do not take care of properties the same way that owners do. It's not their investment to protect.

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Ayashe

You will have the base fees of your mortgage fees, but also most people choose to have their property taxes put into their mortgage. No worry about having the money saved up through the year to make those payments, the bank will do that for you instead. Then add in the property insurance, I imagine you would have to let your insurance company know that you are also renting the building out. I imagine there is more insurance in that case. Another consideration is the housing code. Each municipality has various rules that have to be met on what is allowed in rented property. Could be a matter of fire alarms, how certain appliances are wired or something as big as how many bathrooms should be in a building.

A few tips I have learned over the years. In regards to pets, to allow or not to allow? If you allow pets, particularly dogs you may want to do a pet interview. You don't want someone who has an angry dog biting everyone in the neighborhood. Charge a pet fee per animal and also request that they return to you proof of vaccinations. If they cannot provide this much they are probably a careless pet owner that you don't wish to have in your home. A spraying animal can do a lot of damage, so can a nervous dog locked up in a room. I knew of a friend who had a dog that tore out all of the sheetrock from the mudroom she locked it up in.

Another consideration to keep in mind in maintenance. I have known of property owners who would allow to do some basic maintenance such as changing lightbulbs. What a hassle right? Possibly, but in doing so you are giving yourself a nose in the door to take a peek at how they are keeping your property. Not a bad idea to have an agreement to allow an inspection quarterly or at least twice a year.

In writing your lease contract a consideration to make is to consider offenses which could lead to an eviction. You can definitely put it in place that certain police charges are unacceptable and will lead to an eviction. I know that where I live there is an apartment that has such a policy on drug/alcohol and domestic abuse. I know that many would probably disagree with the drug and alcohol part, but when an aspect of someone's life disrupts another it is unfair. You can also make your own personal decision to let it slide if it occurs, keep in mind that if you find out the renter is trashing your place this could provide another avenue to evict them.

Get to know the nearby neighbors, give them your number and make them comfortable with calling you if they have any complaints about your tenants. You could end up with one of those complainers who never seems satisfied and calls you over every little thing, but it could also be worth it to you and your investment if something shady were going on.

bsbllplyr1234

Ok, thanks everybody for all of the wonderful advice. I have decided to wait an extra year, save up for a larger 10% down payment and get some of my family (who do contracting work) to help me out. I will live for the first year in a dorm room to make good friends and build up a credit score. I shouldn't have much of a problem with college payments because I'm living off of academic scholarships and a college fund. I will work on getting a nest egg of $25,000 before I start. ($12,500 down payment, and $12,500 for maintenance/emergencies/fees/taxes.) I would require a year-long lease to each person so that money is a guarintee. I plan to have a no pets/firearms/drugs policy. I will also have the house inspected to make sure that there are no fire hazards. I will also contact a lawyer to make sure everything would work out and how to do the paperwork. I would work out a co-signer such as my parents to get a lower loan rate. In case somebody did do damage to the house, I would have an $800 deposit. For the bills, I would have all of them in my name but charge extra per person per month to cover the previous month's bills (or just charge them about $100 a month per person for a total of $500 per person), no long distance phone calls.

Any other comments? I really appreciate all of this

snowy

Your deposit should AT LEAST be equal to a month's rent on the house, especially if you aren't going to require first/last month's rent up front as a security deposit. Here it's not unusual for landlords to require first/last month's rent as security on the lease in addition to a damage deposit, which may or may not be refundable. At least part of it shouldn't be refundable, because you'll want to clean the carpets and do other repairs on wear and tear between tenants, and you may want to change the locks between tenants if all the keys are not accounted for.

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jewels

I've changed my mind with further info. :nono:

You've got more than a year to go. A year's lease is not even close to a guarantee of income. A bank won't loan you money based on these declarations. I'm not even sure if a co-signer would do the trick for you. Talk to a banker or another adult.

$800 deposit is fine and dandy. Will you be able to pull a couple of grand out of your pocketbook for anything more than painting and cheap carpeting, i.e. appliances, electrical or plumbing?

Do more homework on loans, income taxes as they relate to rental properties, and get yourself a stable income (i.e. job) for a few years. Unless, of course, you come into a rather large trust fund. In that case, PM me.

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We are always more anxious to be distinguished for a talent which we do not possess, than to be praised for the fifteen which we do possess.
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kurty[B]

Are you planning to rent to college students? Is it 10-15 minutes away driving time, or walking time? In the towns I lived in with colleges, it was the neighborhoods directly surrounding the colleges that benefited the most from what you are planning to do. If the house you want to purchase is 10-15 minutes away, you might find it difficult to find renters if there is more availability close by.

Also, college-age tennants are destructive. You might have a good set one year, and only have to clean up the house after they move out, you might have another set the next year where ALL the carpets have to be ripped out, and replaced, the woodwork is all destroyed, and toilets and sinks have to be replaced.

Unless you're willing to pay a management company to manage the home for you, and then pay for repairs, expect this to be a time swamp for you. I concur with the going to college for one year, saving some more, and deciding if you want to continue with the idea. I personally think it's a great idea, but needs to be thought out carefully.

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