College Station & Bryan Real Estate Search

Rental or Dorm vs Purchasing in Aggieland

 

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Living on Campus can be a wonderful experience.  Some parents have a higher value of that experience than others.  While there is no doubt campus life has its advantages, there are also several drawbacks. 

In 2024 to live in Hullabaloo Hall on the Texas A&M Campus the room rent is over $1300 per month and a meal plan is required which could add another $450 per month for a total monthly expense of over $1700 for a dorm room—a nice dorm room, but it is still a dorm room.

Many parents I visit with value the “Campus Life” Experience.  While they are not usually willing to put a dollar value on it we can put a dollar value on the rate of return of the money invested.  The return on rent as an investment is always zero.

 

Let’s use the $1750 per month as an example.  For example purposes, let’s assume a 20% down payment, on a 30 year fixed rate at 7%.  In this example your $1750 per month could purchase a property at  around $328,000—If that property is a 3 bedroom house, you have the potential to lease two bedrooms to help cover taxes, insurance, HOA, and maintenance. I used Calculator.net’s “house affordability based on fixed budgets” calculator, to calculate these amounts—feel free to do the same with your real dollar amounts.  Take a look at these two real examples - as of June 2024 - 

When investing in rental properties, it’s essential to avoid common pitfalls. Here are some mistakes to steer clear of:

1. Insufficient Research and Due Diligence:

   - Don't skip thorough research on the property, neighborhood, and market conditions.
   - Neglecting due diligence can lead to unexpected issues down the road.

 

2. Ignoring Financial Analysis and Cash Flow Considerations:

   - Properly analyze expenses, rental income, and potential cash flow.
   - Overlooking financial aspects can impact your investment's profitability.

 

3. Neglecting the Property Inspection:

   - Always get a professional inspection before purchasing.
   - Hidden problems can be costly and affect your returns.

 

4. Overlooking Location and Neighborhood Quality:

   - A great property in a poor location may struggle to attract tenants.
 - Consider proximity to amenities, schools, and safety.

 

5. Lack of a Clear Investment Strategy:

   - Define your goals: long-term rental, short-term, or fix-and-flip.
   - Without a strategy, you might make impulsive decisions.

 

6. Not Seeking Professional Advice and Assistance:

   - Consult real estate agents, financial advisors, and property managers.
   - Their expertise can guide you toward better choices.

 

7. Making an Emotional Investment:

   - Avoid falling in love with a property based on emotions.
   - Stick to your financial goals and objective criteria.

 

Remember, learning from these mistakes can lead to successful real estate investments!