buying a house? NF

[newboykool]

Hi everyone, i'll be going to University of Waterloo in the fall and i'm having trouble finding places to live, i find renting really not worth the money

i have some money for a car and i'm thinking of spending that money on a house and rent it out

i found a house for sale in the area for about 240K and with 0 down payment, the monthly payment is less than $900

if i rent the house out to 2 or 3 other students, i could cover the monthly payment, but i'm worried that there might be times where i won't have that 2 or 3 people

is it easy to rent out rooms in waterloo area? this house is about 7 km away from the school

Thanks

[danbouck]

I would think that the added stress of renting out a house while going to school would be too much.

[bigbuck]

You sure about your math?? You don't mention property taxes, hydro, gas, insurance, upkeep, etc... etc.... you'd probably be looking at $1500+ per month assuming you can even qualify for the mortgage. When it comes to student housing, banks are not too eager to lend money. Now if you are able to swing the financing, you should have the parents of the students sign the lease for the whole year, not just the school year. They won't like it but that is the way the game is played. There is a lot involved and you need to make sure you've taken as much as possible into consideration.

Another thing is public transit, how far to the closest bus stop?? Any transfers between buses?? Ease of getting to the school is very very important.

I'm not trying to put a damper on what you are thinking about doing, I have a friend in Waterloo who has become quite successful at doing what you are thinking about. It involved a lot of hard work but he has quite a few units now and it is his full time job.

[Banger68]

You can get approved for this mortgage?

[Millhouse2020]

I lived in the area for about 7 years. Its a nice place overall. There are tons of student renters however, it comes with its issues. Students only need accodmodations during the school year and they are notoriously hard on property. I dont think you will have a problem finding renters, the problem will be finding good responsible ones. If you wish to deal with roommates, this further complicates things from a personal point of view, it would not be for me.

 

As mentioned earlier, you need to take ALL expenses into account, mortgage, property taxes, utilities, insurance etc. With all these costs factored in, it may not be as cheap as you think. Homes close to the schools are notoriously expensive since, there is great demand for rental purposes. The closer they are to schools and transit, the more you can charge in rent, within reason of course.

 

You may want to speak with someone who does this sort of thing, renting to students in particular, to give you the lowdown. Im sure there may be others issues, pro and con which we have not mentioned yet... Good luck!

[crappieperchhunter]

I would think that the added stress of renting out a house while going to school would be too much.

 

Tell my 22yr old son that. He's working 20-30 hours a week....going to school full time...and has his sister and her boyfriend and son living with him in his condo he bought last June to help with the mortgage. I worry everyday that he has bitten off more then he can chew...but I sure am proud of him.

 

And he hasn't got a dime from Mom and Dad for the house or school and his first year he had a 92% average Did I already say I was proud of him

 

It can be done...but you gotta be made of some strong stuff. Again did I mention how proud I am

[adempsey]

Just rent. Even better, go stay in a dorm for your first year - most fun you'll have and you'll meet your roommates for the next year.

 

First, you won't likely be approved for a mortgage without someone co-signing for you. Do they even do 0 down payments anymore? I thought they stopped that? Someone already mentioned taxes, water, electric bills....

 

Second, if you don't like your roommates - which happens often - you can leave in 60 days, or at least at the end of the school year. If you own the house you are stuck with your tenants until at least the lease expires.

 

Third, once the school year is over you can go back home and not pay rent (believe me, you will miss the luxury of being at home).

 

Fourth, when school ends you will have a 4 month gap in the rent unless people sublet.

 

Fifth, tenants can be a huge pain to deal with. At least in Toronto, tenants hold all the cards and if they skip rent the landlord can do very little about it. It might be different in Waterloo, I am not sure.

 

Sixth, at $250k it's probably an older house. Are you prepared to take care of the repairs? yard work? There will probably be a lot of them if I recall my University days clearly enough.

 

That being said, I met several students (or their parents) over my years that did exactly what you want to do. So, it's doable, and it may work out just fine for you as long as you are well prepared and buy the right property. Also, do you have a sibling that will be attending UoW in the near future? If so, it would make more sense to have a place for them to stay as well later on. So, it might be something you can discuss with your parents and they can help you out.

 

Another alternative is to rent a house and sublet out the rooms. That was something I also came across several times.

 

Best of luck!

[Old Man]

Sounds like a good idea and that your thinking in the right direction. Renting is a waste of money and a person can build wealth through property ownership. However, you need to look at all your numbers, insurance, mortgage, legal, utilities and maintenance and come up with a realistic projection of the cost. Your next thing is to access your ability to find steady and suitable tenants. You also need to have a contingency in place to deal with the possibility of being short of tenants at some point. With the cost of borrowing money still low and property prices in a bit of a slump, it would be good time to do this. You could build yourself a nice little bit of equity for your future, but you need to crunch all the numbers, access the risks, have plans in place as well as an exit strategy before making your move. Good luck.

Edited May 31, 2011 by Old Man

[newboykool]

Thanks everyone for answering =]

it was just an idea that came up to me a couple of month ago, i know buying a house is not as easy as it looks like, i thought about other expenses other than just the mortgage, i figuered with the tax and other bills it would cost at least $1500/ month,thus the planning of renting it to 3 people.

once again, thank you all for answering, i'll be doing a lot more research on this.

btw, hows the fishing in waterloo area?

[Headhunter]

btw, hows the fishing in waterloo area?

Grand, I'd say!

HH

[NAW]

To bad JohnF aint around to answer this one eh..

 

Listen to the advice given here. I second the living in a dorm for your first year too. It was a great experiance for me.

 

Owning a home is a lot more then just a motgage payment.

Edited May 31, 2011 by N.A.W

[vance]

Better check the local zoning bylaws,most cities try to prevent subletting out houses especially to students in residential areas.there are limits even then on how many rooms you can let and permits are needed.

 

vance

[troutologist]

7km is far from the school to get alot of tenants. Usually has to be something special to attract people from that distance. Lots of cheap places within walking distance of the school. Whoever mentioned the bylaws on renting to students was right on, when I left they were really getting sticky about it. Live in res or at Columbia townhouses, get to cook your own meals and have more space, still a very low fee to live as well. Get the car and go fishing....some awesome smallie fishing to be had right in town. The big girls stack up in late Oct in the deepr holes.

[timmeh]

As mentioned really look into the bylaws. I know that in recent weeks there have been changes to the renting bylaws in Waterloo. They were proposing a bylaw requiring a yearly inspection and fees depending on the number of renters. I don't know the exact details of what was passed by the city but you'll want to look into that.

 

Also that's a fairly cheap price for a house in Waterloo. Either the location is bad or more likely the house will require some serious upkeep and/or repairs that you'll need to budget for as well.

 

Finally remember interest rates are very low, but won't stay there forever.

Edited May 31, 2011 by timmeh

[Joey]

Look into this zero down, don't think that is possible anymore, and if it is, I think OMHC charges a percentage if you have anything less than 20% down.

[morieris]

They just changed the bylaws which will make it harder to rent it out properly. Not to mention the fact that since I moved away from there 5 years ago tons of housing has gone up for students, there used to be a shortfall of places to rent now they have a surplus. Just my two cents

 

Joe

[OutdoorDan]

I'm not from Waterloo but I have friends that go to UWO. There are a lot of places that rent and are within walking distance of the school. Also, it is going to be very difficult to get full occupancy during the summer months.

[Rizzo]

residence for the first year for sure. Keep your eyes open during year 1 for people you can live with in year 2, and a spot to live in.

[Canuck2fan]

I think you were learn from more from owning a house and renting out rooms than you will from any courses you might attend. If you can afford it I say do it, for one reason. You are YOUNG enough to risk it all and start over if it fails.... Like anything in life BIG RISK, BIG REWARD how bad do you want it? Staying in residence is great if you only want to party hard, if you want to use the same time to give yourself a leg up for life why not try it. I personally know two people who did it and their parents did help in every way except financially they both made it work and it gave them a huge head start over their peers when they graduated as they caught the market right and had huge equity in their respective properties, not just student debts from drinking 7 days a week.

[BillM]

The OP's numbers do not add up. Impossible to pay a $900 mortgage on a 240k home with zero down even with a amortization period of 30 years and the lowest interest rate currently available (Closed variable @ 3%)

 

This doesn't even take into consideration taxes, CMHC fees and all the other crap that comes along with it.

 

I'd find a house with a bunch of buddies and enjoy your college life. You've got all kinds of time to play grownup once you graduate and join the working force

Edited May 31, 2011 by BillM

[Joey]

Don't forget Lawyer's fees and Land Transfer Tax

[BillM]

Don't forget Lawyer's fees and Land Transfer Tax

 

It's like a never ending list, lol!!!

[Dutchy]

Aside from the massive expense associated that has already been pointed out, you have to ask what you are going to do if something happens and you need to do serious repairs. Where will the money come from? Insurance won't always help you.

 

IF you do decide to do it, there are certain student populations you can target that are less likely to cause you grief, namely, science grad students or medical students. They usually have a large workload and are also a bit older. One of my grad students bought a house and rents out rooms to two other grad students from the same department. So it is doable, just depends on how much hassle you want. It is certainly a good investment if you can get the stars to align.

[danc]

Something I'd be very concerned about is if things go bad and you can't pay your bills, your credit rating goes out the window and the whole world knows about it. Your credit rating is perhaps one the important things that you own. For example, lets say the furnace goes kaput in the middle of winter. Is 5 to 7 grand available to replace it? Who's gonna lend a student with no income, and a quarter million in debt, that kind of money? Tennants move out. You have no more rental income. OUCH!! It's not as easy as it looks, otherwise everyone with a job would be a multi property owner and laughing all the way to the bank.

[OutdoorDan]

OP,

 

Are you sure those payments you mentioned are not bi-weekly? That would make more sense.