How Ryan Chaw Turns Student Housing Into Six-Figure Income

Ryan Chaw (00:00)
I would get it to like six bedrooms and if I rent it out to

six students each paying $700 per room. $700 x 6 is what? $4200 a month in rental income. And because my mortgage payment might be around $2000 a month or $1500 to $2000 a month, the cash flow would be more like a total of $2000 net cash flow per month on these properties. And what’s nice about that is if you can get to four or five of these properties, it means

you have a net income of six figures and you can effectively retire from you know whatever job you have

Michelle Kesil (02:13)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil. Today I’m joined by someone I’m looking forward to chatting with, Ryan Chaw, who is a pharmacist turned real estate investor with a niche on student housing investment. So excited to have you here today, Ryan.

Ryan Chaw (02:31)
Thanks, Michelle. Thanks for inviting me on the show.

Michelle Kesil (02:33)
Of course, let’s dive in. First off, those not familiar with you and your work yet, can you share what your main focus is these days?

Ryan Chaw (02:41)
Yeah, so I do student housing and I do it by renting out by the bedroom to usually double or triple the normal rental income. And I invest nearby top universities and hospitals. And so I rent out to a lot of mainly graduate students, but some undergrad as well, as well as healthcare workers, like medical residents or people doing medical, their fellowship in medicine.

Michelle Kesil (03:06)
And which markets do you operate in?

Ryan Chaw (03:08)
I’m in Ohio and I’m in Sacramento, California and Stockton, California.

Michelle Kesil (03:14)
Awesome. And so how did you decide to get into student housing as your investment niche?

Ryan Chaw (03:21)
You know, I saw my…

friend do this in college, he had his aunt help him buy a property nearby campus and he had his college buddies house with him. And his college buddies were basically not only covering his mortgage but also giving him some money on top of that. And so I was like, wow, this makes a lot of sense. Why don’t I get started on this as soon as I graduate and start investing in real estate? And so I realized very quickly, I mean,

I guess not the first one but probably by the second one I would say the calculations really make sense for renting by the room even in California so for example, let’s say I Took a single-family home and I was able to create additional bedrooms by maybe converting the living room or the family room or dining room or maybe there’s an extra office space or bonus room I’ll convert those into bedrooms and

I would get it to like six bedrooms and if I rent it out to

six students each paying $700 per room. $700 x 6 is what? $4200 a month in rental income. And because my mortgage payment might be around $2000 a month or $1500 to $2000 a month, the cash flow would be more like a total of $2000 net cash flow per month on these properties. And what’s nice about that is if you can get to four or five of these properties, it means

you have a net income of six figures and you can effectively retire from you know whatever job you have

and so that’s what made me super excited about continuing to buy these student rentals.

Michelle Kesil (05:49)
Yeah, amazing. And what would you say have been some of the main keys to have allowed your business to be able to grow, run successfully and be able to expand into different rentals?

Ryan Chaw (06:04)
Yeah.

I guess the first key is I targeted kind of like top colleges. So I would like search Google US news top colleges in California where I’m from. Right. And it came up with, you know, a list of colleges where there’s a lot of good graduate programs. Maybe it has like a pharmacy school, nursing school, medicine, dental school, law school, whatever. And I will invest nearby those top colleges that have those programs so that

I

can rent out to high quality students because typically the students I rent out to are people who have you know Maybe they had like straight A’s in high school or did very well in the SAT and they’re also very well rounded imagine if you rent out to like Ivy League school tenants or Ivy League school students versus maybe like I don’t know community college where they’re still trying to figure out their major Maybe they party a little bit more Instead I’m renting out to people who are really focused on their studies. Maybe they’re getting that

doctorate and they don’t have time to have a wild house party right they’re really there to study get that degree and you know go from there and ⁓ that’s usually what creates a really high quality tenant for me so that basically my houses can kind of run themselves right somebody who’s a doctor or you know a medical student is is more than willing to help out around the house

to somebody who’s maybe a lower quality tenant.

Michelle Kesil (07:31)
Yeah, absolutely. What have been some of the biggest challenges or obstacles that have happened in this role?

Ryan Chaw (07:40)
So during COVID, all these colleges shut down and went online. So that was a big deal for me. And what I had to do was I offered some discounts for people to stay at my properties. And I had to call up as many people as I could. I called up all the students that I had signed on the lease and said, hey, I know there’s this emergency coming or going on. You’re not obligated to stay on the lease, but we’d love for you to stay. And what I found is most people actually

actually

wanted to stay because they wanted to have some sort of college life still and be around their friends and study together. So I would say about 50 to 75 percent of them stayed. The other percentage of them I offered discounts and that got them to you know decide to stay and I also asked them hey if you bring in a friend I’ll go ahead and give you $200 off your first month rent and then

You know that friend could stay and we’ll offer them a discount as well. So Because I have you know, six people five or six people per house Each of those five or six people have three or four friends And so I was able to actually fill up all my houses during kovat and have a hundred percent occupancy I did take a bit of a pay cut my rental income before kovat was 10,755 per month But after kovat or during kovat, was around 9,300 per month and that’s in california

for the California properties. But then it went back up obviously when colleges went back in session. But you know that was something that did happen to me that I had to figure out on the spot.

Michelle Kesil (09:13)
Yeah, absolutely. That’s awesome that you were able to pivot and still, yeah, create success with the business even during those times of uncertainty.

Ryan Chaw (09:24)
Mm-hmm. Thank you.

Michelle Kesil (09:25)
And

what are you most focusing on solving or scaling to next?

Ryan Chaw (10:05)
Yeah, I mean my ultimate goal was to reach a hundred student rentals. So it could be like 10 student rentals and 10 different top colleges. You know, I didn’t have a very specific like I have to do it this way. I’m kind of just putting out there in the universe and you know seeing what happens. I’m currently at 14 student rentals. So you know getting there but you know like I said I’m at the point where because each student rental makes a really large

large

amount of cash flow, I don’t have to feel any pressure because I have that income coming in as passive income. I basically have that financial freedom to be able to do what I want, where I want, with whomever I want to do it with. So basically I wake up in the morning, I get to decide what I want to do that day. And it’s a very freeing feeling. Like, you you have a lot of autonomy for what you do, for what you get to do. So I’m kind of, you know,

point now but I’d love to continue growing and I do really have a passion for providing really good high quality student housing because I feel like there’s a lot of bad landlords out there and it’s you know up to me to be a good landlord and be a good role model for people.

Michelle Kesil (11:18)
Yeah, what does that mean to you being a good landlord? Like what kind of attributes does that entail?

Ryan Chaw (11:24)
Yeah, I think obviously caring about some of the struggles that they’re going through. Maybe let’s say some housemates are having a dispute. have a system in place for that to make sure it gets resolved. So for example, for housemate dispute, we have what we call town hall meetings where we’ll have somebody who’s kind of like our boots on the ground, local person go into the house, set up the meeting and every all the housemates come together and discuss problems at the house.

Maybe the dishes aren’t getting done. Maybe ⁓ the vacuuming needs to be done and they take terms every month Who’s gonna do the vacuuming and maybe for the trash they rotate on a weekly basis, right? And so having those town hall meetings and setting those expectations Really helps cut down on conflicts makes everyone feel comfortable with each other They feel like they can trust each other to you know work together to make sure the house is in a good sanitary clean condition and you know

enjoy their living circumstance.

Michelle Kesil (12:24)
Yeah, absolutely. And when you say that you are wanting to continue to scale, what does the process look like in finding the right houses that you’d like to invest in?

Ryan Chaw (12:37)
Yeah, so first I look for the top colleges, so I’ll go to US News top report, but then I also look for houses that are super close to the university. Typically, I try to be within walking distance because that’s what really creates the strength of your brand. If you’re super close to the school, it’s convenient for students. when they have those 8 a.m. classes, they can wake up at, you know, 740 and brush their teeth and go to class because it’s just a five minute walk away, right? So I really

try to be within a five to seven minute walk, but if not within at least a five minute drive to campus. And then I also want to be in safe neighborhoods. So students really, and especially the parents, they want their kids to stay in a neighborhood where it’s safe. So if I’m walking from my house to the school, I’m not encountering a lot of trash. I’m not feeling like unsafe, like I’m passing through some unsafe areas. So that’s really important is to walk from your house to the campus to see what that walk is like.

Especially if you’re you know, it’s 10 p.m. At night and you know, you’re female and you’re walking the streets. You have to feel safe The next thing is I want to be affordable. So I do I do some analysis and research into what people are charging in that area and I want to make sure I’m within the student budgets, right? And then I basically do that calculation Okay, so if I charge this much per room and I put six bedrooms at this house This is how much rental income I could make and then I will

the mortgage payment and from there figure out the cash flow and if the cash flow is 2,000 or more per month and net cash flow that’s usually when I’ll go ahead and pull the trigger and buy that property. If it’s less than that I generally don’t like to take a look at it I mean I generally move on to a different property.

Michelle Kesil (15:05)
Yeah, definitely. And are you planning to extend outside of student housing or are you want to continue to stay in this world?

Ryan Chaw (15:13)
You know, I am a big believer in focus and choosing one, you know, field or avenue of investing and go an inch wide and a mile deep is what they call it. So I think, you know, the better you can master something, you get disproportionate results. You know, it’s very exponential type growth. And so I continue to buy student rentals because I’m just really, really great at it. And I have a really, really good team to manage it.

as well who’s specifically trained to manage student rentals. yeah, I just will continue doing the, you know, buying student rental properties.

Michelle Kesil (15:48)
Yeah, and what does the team look like? How is that structured?

Ryan Chaw (15:51)
Right. So at the very beginning, I actually was a one man team. I had to do the marketing, I had to manage, I had to find the deals, everything, right? So I bought the first maybe three, four properties without having any team. Then the first person I hired was a bookkeeper to manage the utilities, the rent payments, late payments, etc. And then I bought, I brought in a full time VA. So this is when I was maybe at seven or eight properties, I brought

a full-time VA to manage all the operations. So they have the customer service, customer support, marketing, management of the property itself. And we also have a boots on the ground that they coordinate with. So if there are issues, appliance breaks down, for instance, they will have the boots on the ground person go in and fix the issue. So I have that full-time VA and they’re based in the Philippines. They’re virtual assistant.

You know, we pay seven dollars to ten dollars an hour for each of our VA’s which is really good in the Philippines and I have another part-time VA who’s 20 hours a week And that’s pretty much my team. Yeah, the local person on the ground the two VA’s and the bookkeeper

Michelle Kesil (16:58)
Yeah, amazing to create that simple team structure.

Ryan Chaw (17:02)
Mm-hmm.

Yeah, it definitely doesn’t take much especially if you when you buy your first property You’ll have maybe six tenants and so you can keep all track of all of that on an Excel spreadsheet That’s what I did. But then when you scale up, that’s when you you know for me I have 90 tenants nine zero So I have to have systems in place at that point But I think at the beginning you can do this on the side of working full-time I was a full-time pharmacist when I bought my first six properties I would say before

Michelle Kesil (17:03)
What I did. Yeah.

Ryan Chaw (17:32)
I finally started cutting back on hours and eventually retiring.

Michelle Kesil (17:37)
Yeah, and what advice would you give to someone that’s wanting to get started in investing and maybe in the student housing route?

Ryan Chaw (17:44)
Yeah, you want to get started right away. You want to have your W-2 so that you can get qualified for a mortgage. And so you definitely don’t want to just like quit your W-2 and go right into real estate and just hopefully it will work out right. No, you want to keep your W-2 and buy the rentals on the side because you’re going to get the best financing that way. Your debt to income ratio will also be very low. So that’s what qualifies you. Then you want to, you know, buy nearby

a top college like I mentioned try to find houses that are larger as well that’s really important because the more square footage you can have at the house the more likely you’re able to get it to five or six bedrooms. So I usually look for houses that are 1,500 square foot or more and then you know continue scaling just get it right the first time and just perfect things one day at a time and then once you got the handle of that then you can move on to the second one. So take baby steps take it

one step at a time, but at the same time try to improve every day, right? Try to do something that will perfect the system a little bit better every day.

Michelle Kesil (18:49)
Absolutely. And where I know you mentioned you want like the hundred rentals, but what does the process look like to get there? Like how do your goals look like maybe just for this year timeframe?

Ryan Chaw (19:01)
Yeah, I mean definitely I always like reinvest the cash flow ⁓ Obviously because this method has a lot of cash flow You can also and I you know, we’re looking into doing this this year. We’re going to do a cash out refinance As the rates kind of come down

Right now some of our higher interest rates are like 8 % right so it definitely makes sense to do a cash out refinance There’s also the HELOC method which is a home equity line of credit So it’s either cash out refi or HELOC but they both allow you Basically to take out cash from your property that you can use as a down payment on the next property So that’s our hopes is once we get the cash out refi will continue to expand to more properties But yeah, that’s kind

how looks like is you can leverage the cash flow that you’re getting on the property and you can leverage the equity on the property using cash out refinances to continue to scale to more properties.

Michelle Kesil (19:55)
Yeah. Awesome. And do you feel like there’s any sort of roadblocks or challenges within that system or it’s a pretty like smooth and scalable process?

Ryan Chaw (20:09)
Yeah,

I mean, you do definitely want to have a good ⁓ system for managing the properties and marketing. Some people when they’re starting the strategy, they don’t know anything about marketing. And it’s really important you have a very specific system in place. There are specific websites that students go to to find student housing. For example, like roomies.com is a great one to find like housemates, right? So we want to make sure you post you make sure you post on the right websites, you message

them appropriately. You really highlight the benefits of staying at your property, for example, and then go from there and then have like a boots on the ground team, I would say like have a good contractors in place like a plumber, electrician, maybe a roofer, somebody who’s an HVAC technician, you really have to build out your team so that you can manage this from afar. And I was able to do this in California. And then as you know, invest out of state as well, because I really

focused on building the right team.

Michelle Kesil (21:07)
Yeah, amazing. Thank you for sharing your journey.

Ryan Chaw (21:10)
Of course, anytime, Michel.

Michelle Kesil (21:12)
Well, before we wrap up here, if someone wants to reach out, connect, or learn more about what you’re up to, where can people find you and connect with you?

Ryan Chaw (21:19)
Yeah, so I do have a free PDF guide that goes through how to get started in student housing for yourself. And that’s at www.newbierealestateinvesting.com. That’s www www.newbierealestateinvesting.com/guide. Actually, if you do the slash guide, it will bring you to the free PDF. Newbie is spelled N E W B I E. And then it will send you an email, you can always reply to that email. And then I’ll get

all of your emails from there.

Michelle Kesil (21:49)
We’ll appreciate your time and your story. Thank you for being here.

Ryan Chaw (21:52)
Of thank you Michelle for inviting me on the show.

Michelle Kesil (21:55)
Of course. And for those tuning in, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Ryan who are building real businesses and we’ll see you on our next episode.