Two topics to cover this month that can generally be considered residential real estate.  However, since they are investments, we like to discuss them as if they are commercial real estate topics.   

The first one is college town investments.   Around a university or college, a very smart investment can be off campus housing.   In this scenario, you purchase a multi bedroom property for the child’s off campus housing, allowing your child to select the roommates who would pay you rent.   The value proposition here is that your housing costs for your off-campus student are not rent but are instead payments towards your own investment, with additional equity pay down from the rent from the roommates.   You lay the groundwork for a long-term investment instead.   This makes even more sense if you have more than one child attending a college in sequence.   Your child is the informal property manager as well, looking after the property and letting you know of repairs and maintenance needed.  If you don’t take on any debt for the investment, it becomes a pure cash flow play. 

The second topic is vacation home investing.  We suggest this to families or investors that tend to vacation in the same general area on a consistent basis.  Perhaps Myrtle Beach, Shenandoah Valley, North Carolina’s Outer Banks, the Florida Keys, Lake Anna, etc … The model here is you purchase the property in a highly attractive vacation destination and offer it for weeks and weekends that you do not use it as a vacation rental.   You can do this either through a property manager or on your own using self-management services such as VRBO or AirBNB.  You get the dual benefits of cashflow and a vacation property for your own use.

Both can be smart ways to reap a benefit while setting up a real estate investment portfolio.

Ed Martin, edmartin@kwcommercial.com (703)867-3350