College Towns Can be a Great Place to Invest in Rental Properties.
Published on: Wednesday, December 16th, 2015
By Brianna Bobola, Marketing Writer, B2R Finance
It’s September and parents around the country have recently packed up the SUV and moved their college-age children into college dorms, apartments or single-family rental properties.
There’s always a significant pool of students in a college town that want to live off-campus, preferably close to the university. In most cases, there simply isn’t enough on-campus housing to accommodate all the students, and once students are upperclassmen, they often prefer an off-campus living arrangement.
Enter the single-family rental investor. Buying single-family properties near a college campus can be a smart investment decision, but like any decision there can be an upside and a downside. Here’s a look at the pros and cons of investing in single-family properties near a college.
The Pros of Investing Near a College Campus:
- Consistent demand. The demand for rentals near many college campuses is strong, and leases often get signed by May for the next school year. The more bedrooms — and beds — your single-family rental has, the better opportunity you’ll have for commanding a higher rent.
- Renovation costs are reasonable. You’re not renting to Fortune 500 executives, and high-end finishes aren’t necessary. Your tenants won’t be picky about what the house looks like. Of greater concern: Is it within walking distance to campus?
- Rent can be a competitive advantage. Recently constructed student apartment complexes are often much more expensive than renting a stabilized property, such as an older single-family rental. Investors of these single-family houses hold a competitive advantage when it comes to rent prices. We all know college students are looking for a bargain.
The Cons of Renting to College Students:
- Expect maintenance costs to be above normal. College students can put a good deal of wear and tear on your property. Keg parties in your rental property are a real possibility. Are you OK with that?
- You may need to furnish the property. Many students will expect you to provide a fully furnished rental property, often this might mean providing more than one bed in larger bedrooms.
- You’ll be competing with new apartments in some college towns. Developers have plans for as many as 48,000 new, private student-housing beds this year, located in buildings that include many amenities, including pools and gyms, according to Axiometrics. The takeaway for single-family investors: You’ll have more competition in some markets to attract students to your properties.
Whatever you decide, do your due diligence. Renting to college students has pros and cons that should be factored into your decision. Is your rental property perfectly positioned for the student market?