If you’re looking to get rich quick in a college town, Ryan Chaw, a pharmacist would love to show you how. He did make some costly mistakes early on, but he managed to right the ship quickly.
Personally, I spent my college and med school days in Minneapolis, which isn’t exactly a college town, although the neighborhoods surrounding campus where I lived — dinkytown, seven corners, and stadium village, definitely had that college-town feel.
For residency, I spent a year in La Crosse, Wisconsin, and 3 years in Gainesville, Florida, both of which are true college towns where the cost of living is very affordable, housing prices are reasonable, and plenty of students are renting. But I didn’t get rich until long after I had left those towns behind.
This article titled How To Get Rich Quick in a College Town sounds like a hyperbole. But the very first thought I had after reading this article was “Damn, Ryan got rich quick!” so I went with it.
The title is not exaggerated. You can take it seriously. You’ll agree as you read Ryan’s approach to building his real estate empire.
Ryan Chaw is a full-time pharmacist who built a rental portfolio renting houses to college students. He went from making zero dollars to $10,755 per month in just 4 short years. He invests in college towns to reinforce his Financial Independence with rentals.
Think about your last four years. If someone, only four years ago, showed you how to earn $10,000 in nearly passive income a month, would you have taken action? Ten thousand dollars a month is considered rich in many circles. And we can all agree that four years goes by fairly quickly.
This article will show you how to get rich quick for free. You won’t pay a single cent to read it. Ryan shares his 7 Steps to Building a 6 Figure Rental Portfolio in Less Than 3 Hours a Week.
How to make money quick with college real estate
For most new investors, real estate is like Drogon, the dragon from Game of Thrones.
It’s big, scary, and they’re afraid of getting burned.
Maybe you’ve known for a while now that real estate is a proven wealth-building vehicle, but it’s intimidating to take that first step. Maybe you have a few rentals under your belt, but aren’t making as much profit as you had hoped. If you’re either of these people, consider renting houses to college students.
By investing in college town properties and providing college room rentals, I have been able to consistently double the rental income on a property when compared to single-family rental properties in the same college town. And I’ve helped others do the same. You’ll see that college house rentals are one of the most lucrative rental real estate niches, propelling you forward in your financial independence journey.
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Physicians, Pharmacists, and other healthcare professionals are invited to join Incrowd today!
How to get started in real estate
Let me introduce you to college town investing.
Now you might be thinking, “College students? Don’t they throw crazy parties and trash your house?”
My reply to that is actually no. In fact, over the last 5 years of renting houses to college students, I haven’t had to keep anybody’s security deposit due to home damage from a wild party or any other event. And I have 17-18 tenants per year. There are some very simple strategies you can use to make sure you don’t end up with wild parties. I’ll cover those later in this article.
Are rentals a good investment?
Now let’s get into some numbers.
Most real estate investors leave half of their cash on the table when they rent out their house only as a single-family unit rather than renting by the bedrooms.
For example, on one of my properties, I could have rented it out as a single-family unit for approximately $1,419.00 per month.
But after adding two more bedrooms and renting this property by the bedroom, rather than as a single-family home, I’m now making $3,110 per month.
Because I own 4 of these houses, I now make $10,755 per month in rental income. It wasn’t always like this. I started out as a typical pharmacist. I graduated in 2015 with my Doctorate of Pharmacy and worked two jobs as a retail and hospital pharmacist.
Soon I realized I didn’t want to work as a pharmacist until I was 65 after talking to one of the older pharmacists who told me, “Honestly I just come here for a paycheck now. I wish I could have retired a lot sooner.” Though pharmacists typically make over 6 figures, this alone isn’t enough to achieve financial independence.
Inspiration to get rich quick renting houses to college students
My inspiration to get into college town real estate came from my grandpa who had purchased several rentals in the San Francisco Bay Area back in the 50s before Silicon Valley even existed. As we all know, Bay Area prices went up like crazy, so Grandpa Chaw was able to retire early and live mostly off the income from his rentals.
Following my Grandpa’s example, I knew I wanted to get into rental real estate as soon as possible because real estate is truly a TIME game. It is recommended to buy as soon as possible. Cashflow provides some amount of monthly income and with some strategic luck, you can benefit from appreciation over time. As your rent goes up, your cash flow goes up, and you can benefit from generous tax write-offs.
Soon after I graduated with my Doctorate of Pharmacy, I decided to work a lot of overtime to save up for my first downpayment, which I used to buy my first rental in 2016.
Landlord mistakes that cost me over $30,000!
I got a call from one of my tenants one night who said, “You’ve got to fix this. Sewage is pouring out of the kitchen sink and it’s all over the floor now.” I hired a clean-up crew and then a plumber to assess the situation. It turned out that I would need to replace the whole sewage line. This cost me $9000! I had to pay this out of pocket.
Not only that, I hadn’t realized when I purchased the property, it had virtually no AC system. This led to loud complaints during the 100+ degree summers. I ended up having to install a mini-split HVAC system which solved the problem, but it cost me $15,000. Finally, I had a vacancy for 8 months because I had no idea how to advertise my bedrooms. This cost me $5200 ($650 per month x 8 months). This is definitely not how to get rich quick.
Are rental properties worth it?
At the end of it all, I was feeling very depressed and discouraged. I was tired of having to take calls during my lunch breaks and late nights on weekends. I thought I had made a HUGE mistake investing in real estate. But I kept at it because I knew if my grandpa could do it, I could do it too.
Over the next 4 years and after much trial and error, I created a system that allowed me to make money quick. This process allowed me to cut the amount of time spent on my rentals to less than an hour a week and still maintain sizable profits. If you want to know how to get rich quick investing in college rentals as compared to getting rich slowly investing in single-family rental properties, keep reading.
How to get rich quick in a college town in 7 steps
- Conduct thorough research before purchasing a rental property.
- Choose a college town based on enrollment data, college rankings, and programs offered.
- Determine market demand and how much rent to charge if you can put two people into one bedroom (like a couple).
- Make your property attractive to college students.
- Add an extra bedroom (or two), if possible.
- Market your college room rentals to create urgency and demand.
- Create a system to help you self-manage your college town properties.
Step 1. Conduct thorough research before purchasing a rental property.
Check your local city laws first to make sure everything you’re thinking of doing is legal and up to code. Some cities may require you to get a business license to rent by the bedroom. During this Covid-19 pandemic, also check the college website to make sure the college is scheduling on-campus learning (most colleges have some on-campus activities, whether it be with labs or experiential programs).
Realize that despite some classes being online, students are still looking for housing in the area because they want to study together with their friends rather than staying with their parents. My market is a case in point. I’m 100% occupied with 17 tenants until August 2021. When asked, my current tenants told me that their home was too cramped and chaotic so they couldn’t focus on their studying. Also, most graduate school students still need access to on-campus buildings to do their research.
Step 2. Choose a college town based on enrollment data, college rankings, and programs offered.
Choose a college with a good market size to rent your bedrooms. Consider targeting more Ivy League type and professional (Medical, Pharmacy, Law) colleges because most students that go to those types of colleges received straight A’s in high school and are therefore more serious about completing their studies. These types of colleges also offer opportunities for higher degrees such as medical school, pharmacy school, and nursing school. These types of students would rather not waste their time in college partying.
Finally, because these colleges are so popular, most of the students will be from out of the city, state, or country, so they are definitely searching for a place to stay close to the college.
Step 3. Determine market demand and how much rent to charge if you can put two people into one bedroom (like a couple).
If you are cheaper than on-campus housing, then you automatically have market demand. Because you provide more room and more privacy than on-campus dormitories and charge cheaper rent, it makes sense for a lot of students to just stay in one of your bedrooms. Figure out what people are paying for bedrooms using sites such as Craigslist. Also, consider putting couples into a single bedroom to charge more for that bedroom.
Step 4. Make your property attractive to college students.
Try to find properties located in close proximity to campus so that you can charge premium pricing. Also, look for houses with plenty of parking. This allows the college students to bring a car so they can drive to their experiential functions such as health fairs for pharmacy, nursing, and medical students. Check out the neighborhood to make sure it’s a good area so the parents feel safe letting their children stay there.
Step 5. Add an extra bedroom (or two), if possible.
Whenever you can create an extra bedroom, that’s another $500-$700 in additional rental income per month. This is huge! This is the “quick” part in how to get rich quick. Even just adding one extra bedroom to a house will pay for the majority of repairs and expenses that come up on your house throughout the year. Doing this step also typically allows you to at least double the amount of rental income and cash flow you make on the property.
Don’t skip this step!
One of my biggest mistakes was not realizing that one of my living rooms was large enough to convert part of it into a bedroom. It took me 2 years before I finally decided to do the conversion. After renovation, it rented out for $550 per month. Therefore over the course of 2 years, this mistake cost me $13,000 in lost potential rent.
Step 6. Market your college room rentals to create urgency and demand.
Create demand and urgency by highlighting the benefits of staying in your bedrooms vs on-campus housing. Advertise in the areas where your target market (i.e. college students) hang out. Have plenty of college students interested in your bedrooms because this allows you to choose the best tenant out of the large selection of students you have available.
Step 7. Create a system to help you self-manage your college town properties.
I’m a full-time Pharmacist, and I personally spend less than an hour a week managing my rentals because I have the systems in place for self-management.
Empower your tenants to take on certain responsibilities. One way you can do this is since students are tech savvy, have them may make rent payments through a phone app called Zelle. Zelle gives real-time deposits so you know when rent is paid late. Whenever something breaks down in the house, call upon your team of contractors to respond. Once you build a strong team to support how you do business, you will spend much less time managing real estate. This is how to get rich quick – you can’t focus on scaling your real estate empire if you do all of the time-consuming work yourself.
The best part is that you don’t have to redirect 8-12% of your revenue to a property manager.
How to avoid bad tenants when renting houses to college students
- Conduct targeted marketing toward the type of students you want to attract. Look specifically for the types of tenants who are much more worried about passing their midterms and finals than in throwing wild house parties. Focus on advertising where those high-quality tenants are likely to hangout.
- Screen social media accounts. Make sure not to bring in people who smoke, drink a lot of alcohol, do drugs, or party nonstop. Sorry, no huge ravers allowed! Any of these types are hard “no’s” for me.
- Strategically pair up the college students. This creates a balance. Even if there are a few immature college students, they are kept in check by the more mature. Tenant A may have a final in a few weeks. They won’t put up with Tenant B’s plan to throw a crazy party. At least a few people at every house take on responsibilities to maintain the house. If you’re still worried about getting party tenants, you can always take out house damage from their security deposit. But guess what? I’ve literally never had to do this in my full 5 years of investing in college towns. A tenant may be a little messier than than another, but the other tenents, or parents, clean the mess.
- Attempt to minimize common space and remodel those spaces into additional bedrooms. This increases your cash flow and leaves no space left to throw a crazy large party.
A brief word about landlord and tenant laws:
Tenants and landlords need to abide by local and state laws. The landlord has legal responsibilities and expectations and the tenants have legal responsibilities and expectations. If tenants are not paying rent and/or are in other violations of the lease agreement and you feel you need to begin the eviction process and deliver a notice to vacate, or any other official process, ensure that you conduct business in alignment with local and state laws.
And that’s how to get rich quick in a college town
I believe real estate investing should be fun, simple, and enjoyable rather than this big intimidating beast you have to slay – remember the dragon from Game of Thrones? The best part is that it allows you to give back and provide affordable housing. If learning how to get rich quick renting houses in college towns interests you, I’m here to support you.
If you want to learn more, check out “The Unique (and Highly Profitable) Strategy Ryan Used to Go From Newbie Real Estate Investor to Building a Portfolio that Generates $10,755 Every Month.”
By Ryan Chaw of newbierealestateinvesting.com