Fraternity House Rentals

College town rental housing and condos has been a profitable niche for investors for years. But are you ready for a niche within a niche - fraternity house rentals?

 

That's right, frat houses, Greeks -- but nothing quite as rowdy or raunchy as John Belushi's "Animal House" classic.

 

In fact, according to one real estate broker, in Philadelphia home to 30,000-students, properly-drafted rental agreements with fraternities not only can lock in solid cash flows, but protect the investor against heavy-duty maintenance and management expenses.

 

Mark Swingmen, who works with investors in a variety of real estate fields and blogs on Temple University, says heads-up players can sometimes acquire fraternity-type properties at excellent prices within walking distance of campus that produce rentals of $400 a room, or $4,000 a months for a 10-bedroom frat house.

 

Fraternity rentals "are definitely not for the faint of heart," but investors make money with lease agreements that require the following:

 

 

· Fraternity tenants are responsible for all maintenance and repairs of damage. National fraternities or local chapters, in other words, have to fix anything their members mess up.

 

· Parents of students typically are guarantors of timely rent payments, and all rentals are payable electronically.

 

· National chapters are required to keep a close eye on the finances of the local chapters renting the property.

 

As a practical matter, fraternity house committees, alumni and parents don't want to have problems with the landlord, and when money is needed for property upgrades or repairs that are not included in the chapter's budget, they kick in the needed cash.

 

Local investors sometimes own multiple frat houses and owning fraternity property can evolve into "the family business."

 

But what if you're an investor who wants to be involved in college housing rentals, but you don't want to be quite so close to all the action?

 

The good news here is there are publicly traded real estate investment trusts, REITs, that specialize in college and university town housing. At least three are traded on the New York Stock Exchange, and typically offer dividends of five percent or better, along with growth in value per share over time.

 

For example, Austin, Texas-based American Campus Communities owns a huge portfolio of 17,000 rental units in 80 off-campus apartment complexes in places like Arizona State, Penn State and Florida State, to name just a few.

 

Is it time to go back to school -- this time as an investor? Check it out.

 

For more information go to www.phillyrealestateinformation.com

Comments

[Mackenzie Jordan]

They sound like pretty good house rental agreements. I especially like that they have to fix what they break because you know things are going to get broken in a frat house.