Ryan Chaw is Creating a Ton of Cashflow with Student Housing

On the show today we talk… Ryan Chaw is Creating a Ton of Cashflow with Student Housing!

---

Listen on: Apple Podcasts | Stitcher | Spotify | Amazon

Click here to subscribe

Show Links:

• Flynn Family Lending podcast
• PadSplit podcast
• Tenant Cloud software
• www.newbierealestateinvesting.com/guide

Show notes for Ryan Chaw is Creating a Ton of Cashflow with Student Housing!

The Vantastic Life is…
– is in Steamboat Springs CO!

Ryan Chaw’s career

Ryan go started as a pharmacist when he realized the fragility of his job, and decided to get into real estate investing.

First house

100 year old house that ended up having $30k in unexpected repairs.  Then came up with an idea to borrow money from dad and give him the rent of one of the rooms for the rest of his life. 

Boarding house model

This wasn’t the intention from the start, but it showed itself as being lucrative.  And has learned a lot about what students need and want. 

He realized that the more bedrooms he could create, the more money he would bring in. 

Copying what you’ve done

Ryan did something super smart in copying what has worked for him over and over. 

Refinancing

One was refinanced at a new lower rate.  He also used a HELOC where he took out $100k to purchase 4th and 5th property without any more cash from pocket. 

What have you learned

Don’t buy 100 year old houses
Invest in a 5-7 min driving or walking distance from campuses
Really large square footage houses
Over 1500 sq/ft you can usually add more bedrooms and increase cashflow
Only charged 1/2 of what on-campus is charging
3 people to 1 bathroom

What condition are the houses

Ryan buys houses that are in pretty good shape and don’t need much rehab/renovation. 

Worst deal

$330k with $2500 a month in rental income.

Best deal

$511K with $3650 a month in rental income.  And he lives in it.  

Expenses

Are usually around $3k per year, per house. 

Repairs and management

To avoid repairs Ryan does a lot of inspections, and tests everything in the house to keep repairs to a minimum. 

Off market properties

He finds deals off market from his realtors.  The realtor gets buyers and sellers commissions on there. 

Competition to buy houses

Being clear on what he is looking for helps to find him deals that make sense and allow him to ask for repairs. 

Because Ryan has a great W2 he can qualify for a large mortgage, and it’s clear that he can close without issues.

Calculating returns

8-9% cap rate and 12% cash on cash return.  Highest house is around 20% cash on cash, and lowest 12%.  The cash on cash return skyrockets when he can add bedrooms. 

Rules or laws against rent by the room

You should contact the city to make sure what you’re doing is legal.  There can be different restrictions. 

What are the terms of your leases

The students are already paying so much less than on-campus housing that they are willing to lease for 12 months.  He will also try to help students find sub-renters. 

At this point I have enough renters that it’s easy to get more renters. 

Evictions

He hasn’t had to evict anyone yet. The parents what to keep their students in school. 

Covid did make things interesting.  He offered $100 discount for the people that wanted to leave early. 

Join us on our meetup on Thursday at 11:30am PT

https://meetup.com/seattleinvestorsclub
Come hangout with us. 

Prime Method

For finding tenants

P – placement of ads – where target market hangs out. 
R – reviewing social media – look for smoking drugs, raves..
I – identifying the type of tenant – anger, etc.
M – measuring responsiveness – this will pay off down the road
E – ensuring proof of income – usually parents paying rent, so getting back statements from parents. 

Future plans

When you have a model that works… copy that model to scale it. Keep your eye on the ball. 

How are you collecting rent

Ryan uses Zelle because it’s so easy.  I also teach the Tenant Cloud software. 

Contact Ryan

Newsletter with strategy – www.newbierealestateinvesting.com/guide