Expert: Phil Nicols - 6/18/2010

Question
I want to purchase this piece of property to build a home.(where we would live) However, the college/university is so close that people are saying that pretty soon they will buy the land of neighboring houses.  If it does happen and we've already built our home, what are the options? I would appreciate it if I could get a response asap. Thanks.

Answer
-- check with your city, local zoning bylaws, does it allow for a single family home? maybe zoning only allows for multi-unit residential, being so close... but Im only speculating.

-- call the college/university, find out who would be in charge of such development. Ask them what their plans are.

-- if you built, and they build around you, the highest and best use for your new home would be a college rental. Students cant usually pay too much for rent, so, from an investment point, an investor would only look at the possible rent they can get....if you can only get 5 -700/ rent, less expenses such as taxes, maintainence, insurance etc, figure out what the net justifies. I think it will be very little. Certainly less than it will cost you to buy land, get permits and build a house.

-- maybe you don't want to be so close to a college/university anyway - why risk it? there must be other properties to build on?

on the other hand, from an investment standpoint, maybe you can build several units, rent them to students and live in one unit. There might be some upside in that.

best, Phil