The Pepper Group
5845 N Calle Tiburon Tucson
Tucson, AZ 85704
University of Arizona Students Finding Housing Are Buying
Renters Turn Landlords in Hot Tucson Market
| MLS UNIVERSITY OF ARIZONA HOUSING SPECIFIC SEARCHES |
The University of Arizona is in its second century of service. Founded by an act of the 13th Territorial Legislature, the University was created with an appropriation of $25,000, but no land. The Legislature left it to the residents of the City of Tucson and Pima County to find a site for the school.
However, the city and the county were not interested in providing the land because residents were disappointed that Tucson was not named the state capitol, the site of the state prison, or the location of a state asylum for the insane.
Two gamblers and a saloon keeper saved the day when, just before the appropriation was to be returned, they donated 40 acres of land "way out east of town." The University of Arizona was officially born. Classes met for the first time in 1891 with 32 students and six teachers in two collegesagriculture and mines. The school consisted of one building, Old Main, which still stands on campus today.
Today, the University of Arizona is one of the top 20 research universities in the nation, with an enrollment of over 40,000 students, 12,000 faculty and staff and a 400-acre campus. The UA is the largest employer in Pima County and the fourth largest employer in Arizona.
The University of Arizona provides top-quality educational programs and support services that attract an excellent and diverse student body. A highly ranked research institution, the UofA carries out significant scholarly and creative research. The University's educational, research and public service programs also foster links by collaborating in these areas on a local, state, national and international level.
Wherever you are, whether you live on-campus or off-campus, you are a University of Arizona student. Choosing to live off-campus is a big decision that will greatly impact your college experience. The appeal of being on your own is enhanced by more privacy, more personal space, and a greater sense of freedom.
It's never too soon to start your investment portfolio. Students looking for housing should consider investing in a property and renting the remaining rooms out to other students to help pay the mortgage. Then when you graduate, you've got something to sell and reap the accumulated value.
For instance, Real estate has appreciated over 25% in the Tucson area since 2004. Those students who purchased a home last year for $200,000 can now sell that same home for $250,000. That's a $50,000 profit, and if they were really on top of things, they paid little or none of their mortgage payment simply by renting space to other students.
What could be better. Parents...this could make a 5 or 6 year bachelor degree profitable. There are new financing options that will allow both parent and student on the mortgage. Either can deduct the interest and you can help your student to develop credit, while learning about the value of investing in real estate.
University of Arizona students are forking out well over $500 a month to share a small studio -- money they will never see again. But many are starting to rethink how they could beat their landlord at the housing game. The answer is to become a landlord yourself.
After searching the area around the University of Arizona for many years and scoping out dozens of properties, The Pepper Group has found single family homes and affordable duplexes right next to the Tucson campus, many within a mile from campus.
The Tucson, Arizona's booming housing market continues to boost returning student-client's house values. After putting down the money for the duplex or house, their properties have already appreciated by more than ten thousand dollars in less than a year.
By splitting the mortgage payments with their roommates, The Pepper Group student-clients and friends are able to keep costs relatively low for the multi-bedroom home. "It was a great investment," they say.
Tucson's hot housing market is attracting more than ever University of Arizona students and their parents looking to find a lucrative investment opportunity. Tucson and the University draws parents from all over the nation who are sending their child to Arizona for college. By buying a condominium or home instead of renting an apartment, students can build equity and recover the money spent on their education when they sell it.
In many cases, they make a substantial profit that goes a long way to cover the costs of their tuition. It's a good investment for parents while the Tucson's market continues to have annual appreciation of value, because by the time they do sell property, they will have made a nice profit towards their child's education.
For instance, a pair of University of Arizona alumnus split the cost of a condominium with their roommate a few years ago. Even though they faced a $1,600 monthly mortgage, the pair turned a $100,000 profit after selling their unit two years later.
Basically the options were spending $1,600 in rent or buying a place. They chose to look at it from an investment point of view -- buy a place, accumulate the equity, then sell it for a profit, which they did.
Investing in real estate is generally seen as a relatively safe project, and the location of these houses and condos near the University of Arizona campus makes it even more reliable. Proximity to a university essentially guarantees long-term demand, particularly in desirable areas with little new housing being built.
Sometimes the higher prices of the housing market can scare some parents and students away, who often expect the real estate prices to be cheaper. People can be surprised by the costs of the marketplace, however when you take into account the factors such as tuition costs are more than 90% less for in-state residents -- only made possible by the ownership of property in Tucson. This investment of campus area property for their children can be an even better investment, if their siblings end up going to the same university. Also, a piece of property can be used as a vacation home, and a subleted rental in the off-seasons. There are so many opportunities out there for a University of Arizona student real estate owner.
Some students considering home ownership are turning to condominiums, which are much more affordable than single-family houses. The median price of a condo is less than half that of a house. Today in Tucson -- or anywhere else in the Southern Arizona area -- there's really no longer such a thing as a "modest entry-level home." In the last year or so, condominiums have emerged as the alternative.
And some students and their parents are looking for an even bigger purchase. We have University of Arizona students and parents who are hunting down apartment complexes with multiple units and are willing to invest up to $2 million.
University of Arizona parents are really open to any type of investment in real estate that is hot. They just don't want to see money flow out when they can save it. Whether it's a condo or a house, real estate values have been growing rapidly in the Tucson, especially in the last year.
The reliability of these investments, however, has recently been called into question. Condo markets are usually the first to have a correction. A market correction could cause housing prices to drop, making real estate investment less profitable. Yet the amount of this drop, as well as the chances that it will even occur, may only be speculative, many real estate analysts say.
If you are wondering whether to invest in real estate now or to wait, here is something to consider: You may think housing prices in your area will fall. But by the time they do, interest rates will be higher. Your savings could be less, considering the long-term cost of a mortgage. Renting instead of owning could cost you less and give you money to invest. But if you put money into a low-interest money market fund, you won't earn nearly as much.
Buy your home with your rent. Let The Pepper Group show you how. If you can afford to rent...then you can afford to own:
Location, location, location!
- Buying: Choose the area and the type of neighborhood you want. Join a community, and help shape its growth and character as time passes. Pick the part of town you like with a home on a golf course, in an special community, in a rural setting, or near water -- the choice is yours.
- Renting: A rental is often located in a community of other rental properties. Many people rent to keep their options open for quick relocation. Developing a real sense of community with long-time residents and community involvement is not possible. Also, rental properties are usually not located on prime real estate with prime locations.
- Buying: Get complete consumer protection with home warranties. You'll receive coverage of at least one year and up to ten years in most cases. Coverage of varying duration usually includes the home itself, major appliances, cooling and heating systems, and a home's structural guarantee.
- Renting: With a rental, what you see is what you get. If you have problems with an appliance, your landlord may or may not agree to repair it. Heating and cooling systems may barely function, but at a level your landlord says is adequate. Structurally, you have no rights if you feel a residence is sub par.
- Buying: Evaluating a home and its features is easy. The Pepper Group provides information sheets with clearly listed options and amenities. Competition makes it easy to see if a home is overpriced -- simply compare it to other homes currently in the University of Arizona campus area.
- Renting: Rental prices depend on many factors, most of which have little to do with the quality of the rental. If there is a housing shortage, rent will be high, regardless of competitive pricing. If a rental is in a geographically desirable location (such as the University of Arizona area), rental prices per month will reflect that.
Return on Investment
- Buying: Homes in general are highly favorable for a high value appreciation and profitable resale price.
- Renting: Paying rent each month is as good as throwing your money away. You will have nothing to show for your investment no matter how long you live in a rental. There is no equity, no value appreciation, and no return-on-investment potential.
Designed to Fit Your Needs
- Buying: When you purchase a home, you can choose your house. This allows you to live in a home best suited to you and your friends.
- Renting: With rentals, you can be forbidden to put even a nail in a wall to hang pictures. If you do receive permission from your landlord to alter the floorplan, you will receive no return of investment. If your renovation increases the property value, your landlord will collect the dividends instead of you.
- Buying: Save money with energy-saving technology implemented in homes. Laws require more stringent energy standards than in the past. This results in efficient energy usage in homes and savings passed on to the homeowners.
- Renting: Rental homes can have high utility bills if the rental has not been updated with energy-efficient features. In business terms, why should a landlord spend the money to invest in energy-efficient features? The landlord won't save money, instead the renters would save money. This doesn't work out to be a good return on investment for the landlord.
- Buying: Building materials are getting more and more technologically advanced, so advanced that they are becoming virtually maintenance free. For today's busy lifestyles this is a very important feature of a home. Exteriors, in particular, are requiring less and less upkeep on the part of the homeowner.
- Renting: Renters, on the other hand, have to hope they have a landlord who believes in keeping up appearances. If a rental was built some time ago, the exterior and interior surfaces may be extremely deteriorated unless regular maintenance was kept up.
- Buying: Existing homeowners want homebuying to be an easy, quick process for a new homebuyer. The Pepper Group now offers special financing and rates for their customers. We can put the homeowner in direct contact with our recommended network of mortgage companies, and often arrange for the inclusion of closing costs in the home's price.
- Renting: Rental landlords do not provide any type of financial help for prospective renters.
- Buying: When a home is purchased, the homeowner gets to be a decorator right from the start. The homeowner can choose everything from the carpet color to the wall paint to the lighting fixtures. The home is customized to the homeowner, instead of the homeowner having to adapt to a preexisting decorating scheme.
- Renting: Renters are usually not allowed to paint or alter anything in their rental. Decorations tend to be neutral to accommodate many different inhabitants and their different styles. There is no personalization of the rental environment.
A Community that Fits
- Buying: People buying homes find that their new neighbors share similar lifestyles, goals, and values. The community in the University of Arizona area has an identity that attracts people that respond to the identity. Also, in the University of Arizona campus area of homeowners, neighbors are eager to establish social relationships and "be a good neighbor."
- Renting: Rental communities can feature a wide range of unrelated people who may have very different reasons for why they are renting their house and living in that area. The transient nature of renting works against building long-lasting social bonds with neighbors.
Is buying right for me?
For some students, purchasing a place to live makes more sense than renting. The obvious advantage of buying is that you'll recover at least some of your monthly payment when you sell the property, instead of paying rent to a landlord.
I've decided to buy. How do I decide what to buy?
Before looking at particular properties, a good strategy is to make a list of things that you can't live without. Then compile a wish list (internet access, 24-hour security, etc.), and prioritize them according to importance. Once you have this, it's much easier to evaluate the various options.
Here are some factors you'll probably want to consider when choosing housing to buy:
- Location: How near to the University of Arizona campus? Proximity to such things as the amenities, night life, and public transportation? Tucson is a vibrant community, with a strong record of renovation and steady appreciation. The University of Arizona campus neighborhoods vary from block to block, in terms of housing types and proximity to the university campus, shopping, and public transportation.
- Parking: Parking is often an important factor, and a campus parking spot can often add up to $2,000 to your tuition costs. Parking will also increase the resale value of your property, particularly in the University of Arizona area, where parking can be scarce. One note: if you move into a home close to the University of Arizona campus, and don't like street parking, your property will most likely have a driveway and/or a garage.
- Condominium vs. House: Each type of housing clearly has its advantages and disadvantages. By far the most popular option in the University of Arizona campus area is a condominium, which involves the purchase of a unit in a building that is run by an association of owners. Like all organizations, owners' associations aren't always perfect. You put in your contribution as a monthly assessment (typically $100-500), and you expect something in return: ask about the association's financial stability, the size of the reserve, the services that the association provides (landscaping, etc.), and any major expected improvements to the building -- usually billed as a one-time assessment.
FORBES NEWS UPDATE:
- A+ College Real Estate
Sara Clemence of "Forbes Magazine"
The list of college costs can seem countless with ever increasing tuition, textbooks so pricey they might as well be encrusted with gems, and endless incidentals of food, clothing and activity fees. There's not much you can do to make those expenses less painful. But there is one area where you can soften the hit to your wallet -- and if you're lucky, even turn a profit.
Invest wisely in housing, and instead of paying for pricey dorm rooms or ratty apartments, you can write a monthly check that boosts your equity. The cost of housing a college kid keeps going up -- according to The College Board, which puts out an annual report on college pricing trends, the average room-and-board expenses for undergraduates at private schools in the 2005 school year totaled $8000, up 5% from the year before. Meanwhile, the median existing home price in the U.S. went up a similar amount from last year to this year.
Where would you rather feel the increase? College-area real estate can be less vulnerable to price declines than other areas, says Eric Tyson, former financial counselor and co-author of Home Buying for Dummies and Real Estate Investing for Dummies. "It's not like being in the Rust Belt, where if a big company shuts down the factory, it can really throw a monkey wrench into the real estate market," he says. The University, isn't going to fold anytime soon. Plus, a campus means more cultural activities, a decent selection of restaurants and often less crime -- all attractive in a neighborhood.
Jeff Groper, president of Bretton Realty near Boston University, says his office has seen a lot more families buying instead of renting apartments for their children, since interest rates have been so low. "The kids are coming in with their parents and saying we want to spend $1,000 per kid to rent," he says. If the parents are able to make the upfront commitment, he suggests they buy a two-bedroom apartment and bring in a roommate.
Recently, a father and his son came into the office because the child wasn't happy with his dorm, which cost about $800 per month. The family spent $240,000 on a one-bedroom that could be split into a two-bedroom. With a roommate, the parents will end up paying less each month on housing costs. "Through the course of the next four years, the property will appreciate, because it's within walking distance of University," he says. "They will have saved $50,000. Even if they break even, they walk away having had free rent for four years." With thousands of students descending on Boston each fall, Groper says he gets calls from around the country from investors who would like to own in the area.
But it's not just a matter of slapping down a few dollars -- buyers need to consider several factors in their purchase. Anyone looking to buy a rental property should look at the cost of renting versus buying the way they would look at a price-earnings ratio on a stock. "Look at what your monthly costs are going to be after tax benefits, and see how that compares to the rental income," he says. "If you can't come close to covering expenses or exceeding expenses with rent, the property may be inflated." Think about who you're going to be renting to. If you're going to get anxious about a scratch on the wall, you shouldn't buy a property that would most likely rent to college freshmen. Instead, try something that would appeal to professors or researchers.
Location is key -- the closer to the university, the more likely students will want it. But if you hope to one day use the property as a pied-a-terre, or want to sell to professionals, you may not want to be in the very thick of things. "The regular buyers that have done the college bit wouldn't purchase there, because they're too close to campus," says Liz Roberts at Coldwell Banker. "I wouldn't want to live in that campus-feely environment." As always, make sure that the building is sound, and you have good resale potential advise from a REALTOR.
If you do rent to students, be sure to get a substantial deposit to cover damage and cleaning costs, or in case your tenants decide to stop paying rent and go backpacking in Europe for the summer. And remember the bright side -- you don't have to put as much upkeep into a student rental as you would if you were targeting professionals. You can also charge more money for students, because they are willing to pack more people in and share bedrooms, as they would have in a dorm. Your returns on college students as an investor can be very profitable.
Do I need a realtor?
Yes. Without a doubt, a good realtor can make all the difference in the experience of buying property. For most of us, this is our first real estate purchase, and it's critical to have someone who's understanding, experienced, and who intimately knows the University of Arizona campus area.
The real estate agent's job is to do the initial leg work for you: to find properties that match your specifications, and make appointments for you to see them. If necessary, ask for references of previous customers to gauge their track record. Once you become interested in a property, The Pepper Group real estate agent will guide you through the various stages of the home purchase. At that point, The Pepper Group realtor will put you in touch with the other important members of our real estate "team," including a home inspector, a mortgage broker, a lawyer, and a tax accountant.
#1 Purchasing Real Estate Myth:
"I have to pay a buyer's commission fee to my
The Pepper Group Diversified REALTOR."
False. The Realtor's Fee is paid by the Seller, and if both parties have a Realtor, they split the commission. So hiring The Pepper Group Diversified REALTOR professional agent won't personally cost you ANYTHING.
If you decide to buy near University of Arizona campus or surrounding areas, The Pepper Group suggests getting a an experienced realtor. Many University of Arizona alumni from this year and previous years have had good experiences with The Pepper Group:
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