The reason that I only plan on living there for at most 2 years is that I plan on going to a grad school, which is most likely be somewhere else than in Riverside. I’m currently renting at $1700/month so I could save up to $40k in rent by living in the purchased home. I have a stable job and my salary is enough to be approved for homes I’m looking at. My plan is to live in the property until I get accepted to a grad school (summer 2023) and then rent it out to students at UC Riverside. Based on cursory reading of students’ housing ads, it seems that single room goes for ~$700/month. I have about 150k saved up, which is enough for 20% down for a 3-4 BR SFH near UC Riverside. So I think I can expect up to $3,000/month in rent…
When I’m in grad school, I plan on hiring a property management company to get tenants and manage the home. I don’t really expect to make profits, just close enough to pay the mortgage while I’m away in grad school for ~4/years. By the time I start grad school, I would have enough saved up to handle negative cash flow of couple of hundred dollars per month for 4 years. And I plan on maximizing loans instead of my savings for tuition + living expenses.
The reason for doing this is that I’ve always wanted to own a home and I missed my chance in the beginning of the pandemic, when I was in escrow to buy a condo in OC. I have some cash just sitting in my bank + investments and wanted to jump in to the housing market, since it looks like it’s going to keep going up. Once I’m done with grad school, I can either sell the place or keep renting out the property to students to build equity.
Assuming mortgage + home insurance, etc of $2500/month and rent collected for $3000/month, would I be able to break even? I read somewhere that PMs charge about 10% of the rent so I can assume about $300/month? Would it have a negative effect on financial aid, since I would have rental income and own a property.