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Government Sanctioned Realty Investments: Part 2

By: Todd Levinson

Part 1 dealt with the fact that the government is offering loans for large student housing developments under its scheme: “The Student Housing Mortgage”. Part 1 investigated whether this may indicate that there is still an investment market for student housing, and Part 2 now deals with the practicalities of choosing a successful property.

The first and most redeeming feature is that the property must be no more than two miles away from the campus. It may work if your property is on a direct bus route, but this represents wasted money and time to the student. Therefore a home that is walking distance will be a student's first choice. It is also an excellent advertising plus, and one that will be picked up on straightaway by applicants.

Your ideal choice of home will have a small kitchen as most students do not want to spend copious amounts of time cooking gourmet meals. However, it will need a large refrigerator. It will also need a good sized living room that will be used for a 'common room'. If the kitchen is too small for a dining table, you must re-arrange the 'common room' to make room for one there.

Bedrooms will be small as they need minimal furnishings, i.e. a single bed, desk and chair, closet and a bedside unit with drawers. Other items, such as a bedside and/or desk lamp are usually expected and cable Internet is a standard item these days.

One very important change will be that all the bedroom doors must have locks on them. It is easy to exchange the handles for locking handles, but make sure you buy the mechanisms that can be locked from both sides. You keep the spare key as security and make sure the tenant knows this.

The average small three bed roomed home will work but if there are two windows in the large master bedroom it is even better - you can make the master into two smaller bedrooms. This can be done by erecting a wall (double shell) between the two windows and adding a door into the existing wall onto the hall.

Another option is the possibility of using the formal dining room (if there is one) as a bedroom. This will depend upon the layout of the home and will usually entail an additional wall with a doorway being built to separate the dining room from the living room. Each student will share the bathroom and the kitchen and the common room.

If you can find a home that will house four students you will be making a profit, three students will usually just about pay your house for you. Ideally, rentals have to cover more than the mortgage payment; there are also house taxes, home insurance and maintenance of the property to be accounted for.

It is probably worthwhile paying an accountant before you take this on - he will inform you of any tax breaks that you may be able to apply and some of them may need to be initiated in the beginning. For instance, in some states, you can 'pay' a gardener and/or maintenance worker to care for your property and write it off etc.

Some expenses may have to be paid for by you, in the annual budget, particularly in July when the tenants have gone. However, you are investing in a property that is almost entirely bought for you with other people's money. Now that's an investment!

Article Source: Main Articles

Philadelphia Real Estate Guide: Find Old City condos in Center City Philadelphia. Easy-to-use search and neighborhood info from Todd Levinson, Philly Buyer's Agent.

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