Maximizing Income with High-End Student Rentals

Scott Temple

Daniel: Scott Temple has been investing for over a decade. And his experience includes short-term rentals, rent to own, basement suite conversions, and student rentals. And you started out like a lot of people working full-time and you grew your real estate portfolio. 

You still work full time, but you choose to do that, and in your spare time, you run your real estate business and you have a strong commitment. I know that for a fact, to help average people like yourself, grow their wealth through real estate with courses and coaching. Correct?

Scott: That's right. Yes, exactly. Absolutely.

Daniel: And tonight, I tell you something that you call real estate wealth secrets, and you're going to have to be specifically talking about student rentals. Welcome Scott.

Scott: Thank you very much, Daniel. I appreciate that. So, real estate wealth secrets. There are a few the one I really like to focus on is positive cash flow.

Today, I'm going to talk about student rentals, but I love it because of the positive cash flow. In Daniel's introduction you mentioned that I've done rental own, short-term rentals, like Airbnb and VRBO as well as converting basements suites. And the reason I happened to do those, there's one thing in common with all of those diverse models and they put me in a positive cash flow situation. So, I can take just about any property and get it to suit the model, but you can convert a property into a cash flowing property. I'm based in Ottawa and most of my investing right now is in Ottawa. I've had some experiences outside of Ottawa, internationally.

And right now, in Ottawa, the market's pretty hot. So, just about anything that goes up for sale, there's going to be a bit of a bidding war, but when things cool off a little bit, the ones that won't have a bidding war, those are the ones that are getting. Where there's not a family looking to move in and there could be some opportunity, but if you just buy something and rent it out, you're not going to cash flow.

So, that's typical unless you're in a depressed area or there's something going on in the area where you can just buy it, just rent it as it is. So, you usually have to do something. So, if you're proactive about it, then you're going to have a nice cash flow. That's the whole idea of real estate to get some positive cash flow, make some money. So, student rentals, I'm talking about today. I want to give you the way I've done it. And I guess I don't want to call them tips and tricks. It's an approach of how I like to do it, to make my life simple, to make as much money as possible.

And those two actually go hand in hand and you're going to see that the approach I'm taking, there's nothing particularly miraculous about it, but it's really going after a particular market and it doesn't matter what you're doing. Student rentals, rental, it doesn't matter what you're doing.

You have to do it right. Whatever that means, there are certain things to do. You have to do it for your target market. So, you don't do it for yourself. You'll make money. Don't worry, that's fair. But you're doing everything on purpose. You're doing everything on purpose for your target market. 

So, it's a bit of a switch gears to, how do I make money versus looking at your target market in this case, it's students. When we consider value, importance worth usefulness.

And this is what people are ready to trade money for. So, the money isn't the value, right? So, it's not that it's valuable because it's expensive, right? There's something else to it that makes people pay the money. So, if we look at high-end rentals or don't even have to call them higher high end. What will people pay a premium for?

It's going to be important to them. It's going to be worth something to them, worth the money for sure. And it's going to be useful to them above and beyond what your competition. This is how you can be more valuable to somebody. So, you want to look at your target market.

And I do this with the students, so, I look at it, the students here's a student rental. So, I got to tell you a little bit about this. I had the opportunity to do a basement conversion. And this is what I chose to do with it now. This is good for me because if you have carte blanche, you can do this kind of thing. If you're working with an existing property and a limited budget and you have to get that place rented because May 1st is coming up, or September 1st is coming up, you don't have these options. I was lucky enough to do it.

So, what would you do if you could do anything? I'll tell you what I suggest. What do you see here? I'll tell you what I'm looking at. I'm looking at some purchase standards but not common in the older places’ standard in new builds. I see a backsplash, a nice backsplash, not all places have backsplashes. I see a double sink.

I see quite a bit of counter space. Even with the double sink. I see stainless steel appliances. I see a microwave provided that most every student has their own, but there's one. And I see a dishwasher. So, I'm looking at all these things and I'm going to make sure anyone who's seeing this apartment notices these things.

I might not say those aren't nice spotlights, but I'll point out. The light above the sink is on a dimmer and it's on a different switch than the other lights, because I can do anything. And that's what I did so they could have mood lighting. And if I tell that to people when I tell that to students, they kind of giggle and laugh or whatever they do, but it's a positive feeling I've given them.

I point out the dishwasher. It's pretty obvious it's right there. But I pointed out and I do these things for a reason. And I say I don't have all stainless-steel appliances in my house. I actually do. So, I don't say that but I say things like. Geez. That's a lot of stainless steel, but we thought it looked good, what do you think? Just sort of throw it out there. So, they are noticing that, oh yeah, this place does that stainless in fact, most people walk right in and say, oh, it's all stainless because they've been to places that don't have all stainless. I'll also point out that dishwasher. This is a little bit more expensive than most.

And the reason is its low decibels. It's really quiet. And I'll point that out because someone's bedroom is on the other side of that wall. So, they're going to want to know that they might not know to ask it, but when I say it, it registers. The other thing is not only in the ceiling, but in the walls because I put the safe and sound insulation and resilience.

We saw this and I talked at length about this. Here's a half bath. So, this is the basement and a large bungalow and there's enough room for a half bath. So, that was great. Cause there's four bedrooms down there. And so that's a great bonus. And if in your head you're adding up all the expenses, that's a good idea because it is expensive, but we are going to cover the cost in a second. The monetary costs in a second, we can look quickly at the pros and cons of this approach I've taken. Here's the full bathroom back there and you'll notice a washer dryer. They happened to be full-sized. I had the room, so I put them in.

They don't have to be full-sized because with students they're not doing family size loads, two students don't do laundry together. Every student does their laundry independently, usually separately. So, that's the only thing I want to say about these. I paid $50 more for a feature on the dryer called steam.

And the sales guy was explaining that you don't have to iron your clothes. And that $50 was the best money I ever spent, because even though I tell them about the quiet dishwasher and all of that, when I tell them they don't have to iron their clothes, because I paid more for that. They love this.

They love this. It's $50 and I get to say it. I don't know if it works. I've never used that. That's nicer than what I have at home. That's true, these are nice and new, better than I've got at home. And I tell them about the steam feature and I've won them. I can see by now I've got. I don't mean to be facetious or anything, it's just that I've shown them two rooms and I've brought so many great things to say that I think I'm starting to beat my competition. So, here's another room. I just want to point out that because we can do everything I put in bigger windows. And this is not the egress window.

This place down here actually has two egress windows, so big windows elsewhere, but we went ahead and paid the extra money for just larger windows. And the reason is I don't want people to move out. I don't want them to settle for a basement until they can find something better. I want them to be in this room and be comfortable forever, at least for the duration of their schooling.

Now here's the upstairs. We put it in a fourth bedroom up there. So, there's four up four down. I've just pointed out that we, this, when we bought this place, cause naturally I have a joint venture partner on this one, this wall that you're looking at over here, it was all wall. So, we had to find room for their own washer dryer.

Now you can usually find a space. So, the upstairs and downstairs can share the washer dryer area, but I don't do coin operated laundry because they love that if they've come from a coin operated laundry and having access to laundry in the unit is important. It's very important because if you can imagine, they'd have to get on a bus with their laundry and all of that.

It's a real hassle. So, I wanted to give the upstairs complete independence with their own laundry as well. And this, you can't really see on the right-hand side. But all juts in a little bit. That's where the washer and dryer came in. These closets went all the way. And there was room to have the washer and dryer, right?

There's still room for a nice sized bed in here and the dresser. So, what does it cost? You could add it up for a unit, a washer and dryer, nice ones, get it installed cause you got to vent it depending on what sort of a load you have on your grid, your panel, you might have to convert it to gas.

We upgraded the amperage, so it wasn't a problem, but you could convert that. Have I got a dryer on gas? So, that costs money, right? Cause you got to run again. Dishwasher, turn installation. So, a nice box, a quiet one with the installation, pays as much as you want, pay as little as you want, but you have to get it done.

So, I just want to say, yeah, it costs money. For this premium approach, right? The reason I call it a premium approach is because I expect them to pay a premium. That's why I call it a premium approach not because there's anything necessarily special about what you saw. But I want it to be special compared to my competitors.

And then I want them to pay me a premium for everything I'm giving them. But compare, if you don't do it, what's that cost? This is really important. So, if people move in. Because you're not good enough because they find something better because they are knowing annoyance. There's something you haven't done.

And people move out and you have a vacancy. Not because they're done with school it's because they have to find another place because it's just too loud. They can't sleep. They have to take their laundry. Do the laundry elsewhere. That's just a nice little bonus. They can brag to their parents who might not have stainless steel. I don't know. It's those fundamental things that they really needed, one where they value them. They really, truly value them to the point where if they don't have them, they're going to move.

So, you're going to lose that money even if you fill it right after. That's great, but you have to advertise. You have to show it and so forth. Even if you have a property manager doing it for you, they charge for the credit check, crunch, all of this to show the unit and place people. So, it's going to cost you.

So, I want to compare doing it versus not doing it. So, what do you get if you do it? You got to fail that money. But your content, your state, your tenants will stay longer. The students will stay longer. There's no reason for them to leave. You're the best landlord ever. And there's some more tips and tricks I can share if I've got time at the end just to seal the deal.

So, they don't go looking for some better cause there's enough light coming in downstairs. You've given them everything. And when there is a vacancy, cause that's fine, there will be vacancies. Obviously, it gets filled right away. Why? Because you're the best deal. And by deal, I don't mean you're the cheapest.

You've got the nicest places. So, when they start to compare, yours is the best. And if you have competitive rates with a small premium, or a big premium, you're going to do all right now. What happens if you have a vacancy that you shouldn't have? They're moving because it's not good.

They're moving because it's too dark downstairs. Something you should have done that you didn't do. So, two assumptions number one, I just said it's just not there. It's just not there. For example, I'm going to show you and just after this, let's also assume you missed the May 1st timeline and you have to wait until September 1st.

Those are the two dates. Mostly, maybe. Students will read for a whole year, by the way. And you want to get May 1st. Sometimes they go home for the summer and they have sublet to that, but it's just the way it is. So, you want to roll with it? I want to get them on a year lease.

And you wanted to try to get the May 1st cause that's where the majority look. And then some people, if they haven't found anything, they're hoping to find something on September 1st. That's when they start school. Let's assume you miss that and you might not miss it right away. It could be in the next 10 years at some point, the upstairs moves out because you didn't do something. And then the downstairs at some point moves out. Let's just assume at some point you can't fill it right away. It doesn't have to be the whole summer. The point here is that upstairs is vacant for four months and didn't have to be at some point downstairs for four months. There's the money.

This is just for the upstairs. So, this is just for one unit, right? You're missing out on this kind of money too. No, I did at times too. So, there you go. You're out of pocket 10 grand, because of all these vacancies and missed. You can fill it up quickly and so forth.

And then we saw depending on what you spend two to 6,000, or let's say you even spend 10,000 and you don't lose the 10,000, it's like a break. What does that give you? It gives you more time to yourself, right? You didn't have to do all those things on this previous slide.

You don't have to go advertising, be stressed about filling the unit and so forth. So, when we get into the nuts and bolts, like the dollars and cents here, yes, it's expensive. Yes. It's an investment, but in the long-term you're going to be so happy. Now people will pay more for these things.

And I want to talk about a premium. How do you get premium out of this? I saw in one of the comments earlier, it's your charge that the students pay the utilities in my place. I definitely pay all the utilities and they give them good fast. That's another thing, great fast WIFI.

So, they don't have to worry about it. So, one of the things that, I say internet included, all utilities included is here. The reason that's there, that's considered the alternative, put yourself in your target market shoes for a second. Imagine you're there with your friends. One of you asked to put the utilities in your name or a parent's name, and then the bill came and then you got to run around and try to get one.

However, many people are there, you have got to collect a little bit from all of them every month, it's a nuisance and sometimes they don't pay or whatever. It just gets out of hand. So, by me paying all the utilities and passing it over to them and I charged them a premium, I didn't show them the bill.

I just say, here's your rent on time? And they say, thank goodness, because it was a nightmare last time. And I say, here's laundry. And they're like, oh, okay. There's laundry. That's great. I guess it's going to be operated on. I say no and you can start to see a list starts to build where they're just going to rent it.

If they can sign right there, they will. And they do these. I had zero vacancies. I've got two that I run like this to bungalows. I run up and down like that. Zero vacancies since assumption. Even in COVID that'll change because of COVID and everything's going to change, but it'll catch up to me, but it's not been a problem.

And I charge enough to make back my utilities. Do they leave the windows open, and crank the AC in the summer? No, they actually don't. Do I make my utilities plus a premium? I do. Here's what they pay for a little bonus about a cleaner. So, I sent her the cleaner and it's for me.

I want someone to go in and tell me what's broken and how they're treating the place. I want to keep my investment up to snuff. I want to keep it clean. If anything breaks, I want to fix it. But here's a little trick I'll share. And I think I'm running out of time here, but I'll share it.

I tell people after I tell them everything else and the price and all that, and if they're interested in, I'll throw in even more. Cause I know I want to send a cleaner, I'll tell them, oh, I forgot to tell you. I sent a cleaner every month, but I don't put it in the lease. I tell them. So, in other words, If I don't send a cleaner, I don't owe them any money back.

I'm not obligated. I say it's a bonus. It's a bonus tier. I'm going to send a cleaner and I'll say to them, if you keep this place clean in between their visits, I'll keep sending the cleaner. But if the cleaner says, this is disgusting, I'm going to stop saying, send the cleaner and you can live in your own filth and they laugh, but it's such a big bonus.

And that's just a little trick that I do to not be obligated. So, in case I don't send a cleaner, it's not like I haven't fulfilled my duties. So, there you go. You want your list to be huge. You want your list to be the longest compared to your competition, right?

You want to be that person. You want to be that landlord. And we saw that, yes, it takes an investment, but the cost of not doing it could be a greater equal or greater easily. So, be that or with the longest list. And you're going to thank yourself for just how much money you make in premiums, because they'll pay for it and how little you have to do, because they just never move out.

Francois: Awesome. Thank you so much. So, real estate wealth secrets, making average people wealthy. That's awesome Scott. So, scotttemple@rogers.com if people want to reach out to you, you're also on social media, Facebook, Instagram. And then thank you, Scott.