How a first academic year plays out on a four bed house near a large state school, and why the summer surprises people.
Here is a case worth studying for anyone considering a first house near a large public university that has been growing. Take a single house half a mile from campus and follow it through a full lease year. Purchase at $372k with 25 percent down, plus $11,400 in furnishing because every comp in that kind of market rents furnished and the ones that do not tend to sit. Four bedrooms, two baths, leased by the bed at $685, so $2,740 a month. Leases run 12 months, August 1 to July 31, each resident with a parent signing a guaranty. In a well run version of this, collections come in at 100 percent. Expect a couple of late payments, both fixed within a week of an email to the guarantor. That part usually goes better than new operators expect, and the guaranty is the reason. What surprises people is that even on a 12 month lease, the house is mostly empty from mid May to mid August. Residents pay, they just go home. That means no wear for three months, which is nice, and it also means anything that breaks in June breaks in an empty house and the owner finds out late. A July water bill that doubles June because a toilet ran for weeks is the classic example. Turn in August runs about $2,900. Paint in three of four bedrooms, one carpet, a lot of cleaning, one interior door. Roughly $1,150 of that comes back from deposits. Year one, rent collected $32,880. Taxes, insurance, water and sewer, lawn, turn, and a $1,100 repair for a garbage disposal and a bathroom fan come to about $9,800 before debt service. That is roughly what a careful pencil would show, and the furniture spend is the line most people underestimate by about $3k. The reason this reads as a win rather than a shrug is the second year. All four beds preleased by March 20 at $710, without a public listing, because two returning residents brought two friends. That renewal pattern is the real asset in this strategy.
