Apartment Hotel question

General Real Estate Investing
1

Hey Guys…

I am looking at what I thought was an apartment building in PA that is really student housing for a nearby shool. I believe that all of the tenants are students.

I was reading through some of the literature and the owner describes the building as an Apartment Hotel.

I was looking the the PA Code that governs such properties and was interested to find that if a building has only a few tenants whose lease agreements would qualify under the hotel stipulations, even though there are other “apartment” tenants in the building, then the entire building is considered a hotel.

So, does the fact that the building is really student housing, rather than some flop house change anything?

What should I know/be concerned about about an apartment hotel?

Thanks!

Kip

2

Students can be EXTREMELY hard on your property, expect higher than average expenses on this one.

3

I have discovered that the issue may be the collection of the “Hotel Occupancy Tax” from the “occupants”…those tenants who rent for less than 30 days. After 30 days the “occupant” becomes a “resident” and the land lord does not have to collect the HOT from a resident.

Is this ringing any bells for anyone?

4

If the present owner hasn’t been paying the tax, I wonder who would be liable if the tax man cometh knocking? Here in my little corner of Ohio, the evil tax demon has been known to put a lien on the property even though there is a new owner who has followed the law.

Mike

5

Good point Mike.

The question is… the students all start out with a 9-month lease to cover the semester, so the original intent of the lease is that they are all “residents”. Some of them drop out at various times during the semester, sometimes within the first 30 days, so those guys morph into “occupants”.

I wonder even if they started out as residents but ended up as occupants, if the tax is then due on them by definition.

So much to find out…

Kip

6

i am a strong advocate and benificiary of student housing (although after nearly a 10 year run I have recently sold my student housing portfolio)

in my situation, I owned several large single family homes near a university. typically 5 rentable bedrooms in each. I owned 28 houses (total of 130 leases)

in each case, the student self governed their houses pretty effectively, so much so that I was largely an absentee landlord (but I did have a local handyman/representative) that actually lived in the neighborhood of the homes.

what I learned, is that they would govern thier houses, and knowing they had a good thing going would keep peace amoung the house, amoung thier nieghbors and maintain stuff so that the “man” (thats me) wouldnt come around very often and “mess with them”