DIY Success in Student Housing

by Katie Sloan

Using his own equity, a Charlotte man creates a lucrative second career.

Joe Pries offers affordable housing to UNCC students on his own terms. 

In January 2005, I was working as an investment analyst when one of my co-workers showed me a condo he co-owned across the street from the UNC-Charlotte campus.

Right after seeing his unit (a 4-bedroom 2 bath with 1,150 square feet), I ran some numbers on his property. To calculate the possible profits, I figured gross rents less mortgage, taxes, insurance and HOA dues. I didn’t need to get into cap rates or anything fancy, just a simple calculation to see if the numbers worked.

Not only did they work, but I figured if I could own enough of these units, I wouldn’t have to work anymore (at least not a traditional 9 to 5 day job).

My wife didn’t take this idea very well initially. I told her that these apartments were located directly across from campus; it was like oceanfront property, you couldn’t go wrong! I further told her that she could either watch me do it, or help me do it, because I was going to do it. I don’t think this went over very well either as, mind you, she was eight months pregnant with our son. At that point in time, I saw the writing on the wall with my day job; it was coming to an end. I didn’t want to start from scratch at another corporation.

I looked at an apartment with a For Rent/For Sale sign. It had four female student renters and had been partially remodeled by the owner. I made an offer, which was accepted. We put down 20 percent on our home when we built it in 2003; I used some of the equity in our house to fund the down payment on the first few student housing properties we bought. Essentially, I was using none of my own money  — meaning I didn’t write a check from my savings.

The seller of my first unit told me that the gentleman who owned the unit across the hall was “getting his butt kicked” — his daughter and her friend were living in the unit and it was a huge financial drain for him. There were four bedrooms; two bedrooms were empty, his daughter’s friend was paying little in rent and his daughter was living rent free. That unit was my second purchase.

I should preface that back in early 2005, this particular complex did not look like it does today (with new siding, new roofs, new balconies). It was in relatively rough shape as owners who were clueless either let their units sit empty or completely mismanaged their units. Their lack of maintenance showed; the property was definitely rough, but that is an investor’s dream! A diamond in the rough! It’s the tried and true mantra of real estate: location, location, location.

I knew that if I kept on picking up units and hooked up with like-minded investors (of which there was pretty much just one, my close friend Van) who would join me in this great mission, this was going to be a great thing. Another bonus back then was that banks were giving 100 percent financing. I began picking up units with no skin in the game. I’d buy a unit, which cost me almost nothing (basically closing costs) and started making money immediately. That really propelled me to rev up my purchasing.

From the time I bought my first unit, I’d meet students during lunch time at my day job, and I’d go to the units after work to do painting, light plumbing, etc. so that I could learn the business and the properties inside and out. I’m a guy who has never done anything around the house — our first home in Charlotte was new and when we lived in New York, we always rented and did no maintenance work. Meanwhile, my wife, Jessica, became an expert at taking care of the back-end of the business. She paid the bills and dealt with the banks. She also learned the mortgage business in the process and was told by several mortgage bankers that she can run circles around many folks in the business with her broad knowledge. She always knows the right questions to ask.

By August 2006, I owned 18 properties. I was called into my boss’s office for my inevitable layoff from my day job. What a relief! I was now able to grow my student housing business with no restriction on my time. My boss had moved to Charlotte with me from New York so I saw that he was pretty uncomfortable when the H.R. guy was reading off the steps of termination of employment. I stopped everything and told my boss that I was the last guy he should worry about. In fact, I took my severance money and used it as a down payment on two units! I love my old employer for that departing gift.

By October 2008, I had acquired 48 properties in three complexes (two across the street from UNCC, one a block away from the main entrance to campus). I was in my mid 30s and living the dream, working (if you want to call meeting students and parents, schmoozing with them and showing off our apartments, then signing leases “work”) three months out of the year, traveling or spending time with my family for the other nine months.

In July 2008, the Charlotte Observer did a business section feature story highlighting our company’s success, which was a real honor for us. Today, Jessica and I own 50 properties, totaling 180 bedrooms. In three years (since October 2008), we’ve acquired just two properties and did so via private financing with a couple of guys I know. That’s after essentially picking up an average of one property a month for four years. The banks have pretty much shut us down with respect to new loans. Even my commercial lender who said, “As long as you put down 20 percent, we’ll give you loans,” has since said, “No more.”

My company has been profitable from day one. We have paid our bills on time every time, without fail. We are consistently raising rents and increasing profits. It is frustrating to be clumped in with people who borrowed too much and then lost their homes. When we’ve borrowed, we are paying back diligently and have shown zero signs of faltering. I’ve essentially given up on the banks (for now) and continue to operate the portfolio, waiting for when they wake up and realize that lending to someone who has 26,000+ potential customers across the street makes sense.

UNCC continues to grow. The university is building a brand new football stadium to open in 2013 and there will be brand new light rail service from Uptown to the heart of campus in 2017. The school grows by 900-1,000 students annually.

I’m sometimes asked, “How did you acquire so many properties so quickly?” That is a great question, and I typically am reminded of my financial idol, Robert Kiyosaki. Mr. Kiyosaki teaches that if you do as everyone else does, you’ll get the same results everyone else gets. So rather than check the local paper for FOR SALE units or search for FOR SALE signs on apartment windows, I decided to do something different. I looked for FOR RENT signs and started calling those people telling them I was interested in buying.

If you call an owner who is sitting empty, has no clue on how to run this business properly, and you offer to take his unit as is, you’re going to get his attention and you’ll probably get it at a good price. Most of my purchases have not been with a realtor, they have been for sale by owner. Most of the deals I created from thin air, as the units weren’t even for sale. That’s a huge component of my success. I also didn’t always look for properties at an absolute steal. I could have done that, but my portfolio would be significantly smaller today. It doesn’t always have to be a steal to make financial sense. The rental income and future rent increases were what drove my decision to buy as much as possible.

As a small business owner, I’m typically competing head-on with large companies who own mega-complexes with all the amenities around campus, in addition to competing with on-campus housing. I don’t worry about any of them because I operate at a much lower price point. I can beat them by $100 to $200-plus per month per student on the rent rates. Because of that, parents and students love our product. What amenities do we offer? How about over a 4-year period, we’ll save your family approximately $5,000 or more? Is that a great amenity?

I may be in the real estate business, but first and foremost, I’m in the “people” business, and that’s what some investors don’t realize. You can be the best at buying property cheap, fixing it up and putting people in it, but if you don’t manage it properly — if you’re not responsive to your tenants — then you’ll be experiencing migraines and loss of sleep in no time. My tenant base may be 18-25 in terms of age, but I treat them all like they are grown adults.

Some investors claim, “They’re just college kids; they don’t care.” They do care. Today’s students are savvy and like anyone, if you don’t respond to their needs quickly, they will remember that when it comes time to renew. My hours are 7 days a week, 8 a.m.-midnight. I can text with the best of them and encourage my tenants to text me rather than call. When they need me, I’m there. When I’m on vacation, they have a direct line to our maintenance guy. I can be at a poker table in Vegas and quickly respond to a tenant’s concern via text by forwarding it to our maintenance guy. That’s customer service: never leaving your people out in the cold.

I am sometimes asked the question “Joe, what is your exit strategy, every business has to have one.” My response is; I don’t know. There are numerous exit strategies for me but they are not top of mind for me today. What’s important for me is how to best serve my tenants and keep them happy so that they stay with me and recommend me to their friends.

— Joe Pries is the founder and CEO of He’s a private owner who operates student housing around the University of North Carolina at Charlotte.

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