Every summer, millions of students graduate high school and embark on their college journey. With many of them attending universities away from home, the need for student housing becomes crucial. In fact, college students make up over 8% of the entire rental population. As college enrollments continue to rise, investing in student housing has become an attractive opportunity.
Why is student housing a good investment?
Student housing offers a unique and well-defined market that presents several advantages for investors:
- Very little marketing: College towns are vibrant communities with a rich array of amenities, making student housing highly desirable. The appeal of these towns, combined with the demand for housing, means that marketing efforts are minimal.
- Always potential renters: Each year, new students and faculty members join colleges and universities, ensuring a consistent pool of potential tenants. You can rest assured that your student housing properties will never be short of applicants.
- High cash flow potential: The consistent demand for student housing allows you to charge competitive rent rates in the area. Additionally, high occupancy rates ensure that vacant properties are quickly filled, especially if they are within close proximity to the campus.
- Low vacancies: Student rental properties tend to get rented quickly and stay occupied. Even during the summer, many students choose to stay on campus for various reasons, further minimizing the risk of vacancies.
While investing in student housing has many advantages, it's essential to consider the potential drawbacks as well.
Drawbacks of student property investments
Before diving into student property investments, it's important to be aware of the potential challenges:
- Property damage: College students, living away from home for the first time, may not always prioritize home management. Parties and social events can result in damage to the property, leading to repair expenses.
- Tenant turnover: While some students may stay for the entire duration of their college years, others may drop out or find alternative housing. Constant tenant turnover can be time-consuming and costly.
- Not passive income: Unlike some forms of investment, student housing requires ongoing monitoring and maintenance. You may need to handle noise complaints, tenant conflicts, and appliance repairs if you choose to manage the properties yourself.
If these drawbacks don't deter you, let's explore how to get started in student property investments.
How to get started in student property investments
Follow these steps to begin your journey in investing in student housing:
Location, location, location
The location plays a crucial role in the success of your student housing investment. Consider factors such as average food prices, housing costs, job opportunities, and social activities in the city. Additionally, look for properties near the college or along public transportation routes.
Find a property to invest in
Choose property types that are suitable for student housing, such as apartments, duplexes, or single-family homes with multiple bedrooms. Evaluate each property based on its potential return on investment, taking into account the rent you can charge, occupancy rates, and cash flow.
Choose how you'll finance the purchase
Explore different financing options based on the property type and your financial situation. Popular financing programs for student property investments include traditional bank loans, Freddie Mac, Fannie Mae, and commercial mortgage-backed securities. Consider the closing costs and any renovation expenses before finalizing your financing choice.
Decide property management terms
Decide whether you will manage the properties yourself or hire a property management company. Managing the properties yourself gives you more control but requires more time and effort. Hiring a property management company provides a more passive income generation method but comes with additional expenses. Choose the option that aligns with your time commitment and budget.
Market your student housing
Once you have invested in student housing, market your rental properties attractively. Utilize various marketing strategies like flyers, brochures, and advertisements in college publications or online platforms. If you have chosen a property management company, they will handle the marketing for you. Satisfied tenants may even become advocates for your properties.
Student housing is a good investment
Investing in student housing offers numerous benefits. However, it's important to carefully consider the risks and rewards before making a decision. If you're looking for hassle-free student rental properties, consider investing with Ark7. We take care of the guesswork and provide a seamless experience in student property investments.
