<p>Finally the divorce is closed.
I will get a small lump sum which my accountant and lawyer both confirmed it’s tax free.
I was thinking about how to use these money for investment.<br>
It’s hard for me to get a job with good pay, mostly, I will have to live with the profit from the investment.
I have no experience about stock or any funds. I need a place to live, so, I got an idea but need your comments if this is workable.</p>
<p>I’m thinking about to buy a new townhouse near one university, very good location for rent out to students. A 4 bed + 3 bath. I will live in the master and rent out other three rooms to students. The total rental income will cover all the tax, HOA fee, utilities fee, insurance, maintenance. </p>
<p>It looks like a good investment, but :</p>
<ol>
<li>Should I put almost 60% of the lump sum for one investment?</li>
<li>I don’t have credit, guess I will have to pay full cash.</li>
<li>Although the student rental market here is in high demand, but will they pay more because the brand new house?</li>
<li>Is it ok for me (or the students) to live in the same roof?</li>
<li>The house is still under construction, the plan to finish it around end of Oct. Will it too late for student rental this year?</li>
</ol>
<p>No, no, and NO!!! Don’t do that!! You will rue the day… buy a small condo, just for you, or rent a place for a while, and get a job - any job. But I would NOT recommend living in the same place as college students!!! And if you can’t find enough of them to rent, you are stuck with a big place in a student area and not enough funds for the mortgage.</p>
<p>Do you have a job or job skills? If not, a good investment with your money would be to obtain or update job skills so that you can get a job that will provide a continuing source of income.</p>
<p>As to your question … Standard advice is to do nothing for at least six months after receiving a lump sum. Please take that advice to heart.</p>
<p>While I understand the appeal of having student renters pay your mortgage, mixing commercial and personal in a single real estate unit has many issues. Take some time to familiarize yourself with these before considering such an investment. (I’d vote “No, no, and NO!!! Don’t do that!!” … but that’s JMHO.)</p>
<p>In many places, what you are suggesting would be the same as running a boarding house and is probably illegal. You risk investing in a piece of real estate and then not being able to use it as plan.</p>
<p>On top of that, it sounds like a bad plan all around.</p>
<p>For now, you need to take a deep breath and find a reputable financial planner. Ask your accountant and attorney for recommendations. Fee-only (one you pay for advice) is probably the way to go.</p>
<p>Rent for a little while, the real estate market isn’t improving very quickly and figure out your next steps.</p>
<p>You will not be happy sharing a home with college students. An alternative might be to buy a building that has separate apartments, so you can rent them out in order to cover your expenses. </p>
<p>However, I agree with everyone who says to wait.</p>
<p>I also agree with everyone who says that you need to get a job, and if you need to get some specific training to get a job, then go do that. </p>
<p>You have an opportunity to change your life for the better right now. Take advantage of it.</p>
<p>I agree with the others who say to wait. A rental for yourself while you make your plans and get your footing in your new single life makes the most sense to me. If you decide to pursue education, training , work, volunteer experience, etc. to start something new, where you want to live may be at least temporarily related to that. Students looking for rentals usually want an apt. with other students, not a parent. You will likely find it intrusive to share your space in that way. Also, an Oct. start date for student rentals is not practical and construction time lines often get pushed back. It is also a lot of money to tie up in a too big property, especially if that is not a typical arrangement for students in your area.
You should look into your credit score and see what that means in terms of your decision. Having a nest egg may enhance your ability to get a loan when the time is right and your plans are secure. Good luck with the next phase.</p>
<p>For now, put that money in a high interest savings account like the ones at ING Bank, or in a high interest money-market account at your bank, or even into several high interest CDs.</p>
<p>Sort out your longer-term investment strategy with your accountant and/or another financial planner.</p>
<p>Rent a small place for six months to a year, in a community that you think you might like to live in for a longer period of time.</p>
<p>Look for a job - any job - so that you can make some pocket money for yourself.</p>
<p>During the next six months to a year, talk with people who own rentals in that college town, and find out how well it works for them. Learn as much as you can about that kind of business - there may even be a class on it that is offered through a local government housing agency. Then if you still think it is a good business proposition for yourself, you will be better prepared to do it.</p>
<p>Stay away from developers who are building houses right now. They are sitting on a lot of potential inventory, and they will tell you whatever they think you want to hear in order to get you to buy it from them.</p>
<p>I just saw a listing for a rental on the Rice college listing guide… an individual wants two students to each pay $1000 a month for a room and bathroom in his brand-new condo. It doesn’t sound like the owner, who plans to live there, is a Rice alum or student. Doesn’t state his age, but… I sincerely doubt he’s going to get any takers for that amount of money, and I can’t imagine a student wanting to live with a him!!!
Back to the OP - DON"T DO IT!!!</p>
<p>Don’t buy anything quickly. How about looking for a live in position as a nanny or caretaker for the elderly? It would seem that you are qualified, and you would save money by not paying room and board for yourself.</p>
<ol>
<li>No</li>
<li>No</li>
<li>Not just no but heck no</li>
<li>Check your local housing codes. Probably a “no.”</li>
<li>Yes.</li>
</ol>
<p>If you are determined to rent to college students, at least consider a small home with an apartment that has a separate entrance that your part of the home is completely secure from. It’s much harder to get rid of a bad tenant than you probably realize. </p>
<p>I wish you the best of luck. Please take things very slowly.</p>
<p>Have you looked at the tax ramifications? I live in a college town and we have strict rules about how many renters, cars and parking, and noise. Renting to three or four students is a great way to anger your neighbors. College town property taxes are typically very high and then you must look at the income you make from renters.</p>
<p>I agree. Wait a while before making big decisions. Perhaps you could find a situation where you rent a room from a condo owner looking for roommate.</p>
<p>I put deposit and have 7 days to think about it.</p>
<p>The reason why I want to buy this townhouse:</p>
<ol>
<li>I’ll need a place to live. The rent I’ll pay is about to cover the tax, HOA, insurance and maintaince for this house.<br></li>
<li>One of my friend’s kid promised to take one room. The rent she pay will cover the utilities.<br></li>
<li>There is a bigger room with full bath, if I can rent it out to another student or young professional, it will cover the tax, HOA, insurance … (it’s like I’m living in a nice new house but paying nothing…)</li>
<li>The third room, I will hold it until fall 2011. For my daughter, in case she wants to stay with me when she is here, at least her first year of college. This fall, if someone rent it, that will be my extra pocket money.</li>
<li>I knew most college kids don’t like to live with landlord, but there are still some kids who want a quiet and safe place to stay. Some very busy young professional who just need a nice and simple place to live. I would like to take the risk (chance). If doesn’t work, this is a very good location, it will be easy to rent out the whole unit for young couple with or without kids.<br></li>
</ol>
<p>Hope my plan is workable, I have 7 days to think about it. Please give me your suggestions. Thank you.</p>
<p>I’m confused. You asked for people’s opinions, and every single poster recommended you not purchase this house. Then you posted that you just put down a deposit, and ask for people’s thoughts. What, has something changed?</p>
<ol>
<li>I will pay cash, I have no credit.</li>
<li>Yes, association only allow rent out the whole unit, not partial rent. This is one of my major concern too. Thank you for remind me.</li>
<li>Why I do this? I’ve been watching the rental market in this area for few years, it’s always a good investment. But most single house in down town are old and lack of maintenance, I don’t think I’m handy enough to handle it (although it has more profit). And I need a place to live, I found this townhouse in a great location, seems like a good investment chance. Should I take it? Like I said, maybe I will rent the whole unit out to a family, less profit but still a good investment (I got a very good price), maybe when the housing market goes up, I will sell it.
Live in nanny was a good idea, but I will attend community college this fall, study for pharmacy tech license and ESL of course. I found a job as an assistant in a trading company, I will take the job while I’m studying for pharmacy tech.</li>
</ol>
<p>Congratulations on the job and plan to attend school. Is your agreement on the as yet incomplete town house ? Have you researched the builder’s track record?
If you are paying cash, I hope you are left with a substantial emergency fund for the unexpected. The last I heard recommended was a minimum of 8 months of living expenses, planning for the worst case scenario where you would have no tenants.
In most places, this is a very tenuous housing market, which is behaving differently than historic precedents. It is hard to know if one is purchasing at the “bottom” and even harder to know if/when values will rise. This is not my area of expertise and it makes me cautious. That said, you seem to have your mind made up and I wish you the best.</p>