It’s a fact, that real estate investing is rife in college towns, because of the permanent demand for rental properties, and the high returns in investing in this segment. Nonetheless, there is a great deal of learning to know before choosing to invest in rental property in these areas. For a start, no two college towns are exactly alike. The different types of institutions they harbor can change an owner’s ability to competitively lease off-campus housing. That said, the consistent market demand and potential property appreciation drive opportunity. Investing in one or more rental homes close to a college or university can be an effective way to achieve your long-term financial goals.
Across the United States, most college towns have a few things in common: the students, the faculty, and the staff all looking for housing near campus. Such great demand can make buying an investment property in a college town seem like an attractive option. So, what can possibly go against your dream property investment? There can be a few show stoppers and the smart investor will research the market before commencing a property search.
Real Estate Investing: Do The Research First.
As a rule of thumb, it is important to research the campus and surrounding community before deciding on one town over another. At a basic level, you want to look at accurate information on enrollment history versus the projected growth rate of the school. Other statistics to consider are the current and projected ratio of students, on-campus housing trends, and planned future developments. This kind of information can help you estimate the current and future potential of an investment opportunity.
A word of caution here, do not just go by the marketing information presented by schools. Drive around the town, and try hooking up with the locals to get the full story. If a school has shrinking enrollments or is opening a second campus in another community, they may not be very forthcoming with this information, However, both could cause a sharp decrease in demand for off-campus housing. So, data like this is significant to possess before investing in any university community.
Real Estate Investing In College Towns: Private vs. Public Universities
Real estate speculation in college towns is also driven up by the type of institution at the core of the town or city. This is another important consideration when deciding on an investment property. Private universities and colleges usually have stricter housing policies. And they also usually offer multiple options for on-campus housing, thereby reducing the need for off-campus options.
Public universities, on the one hand, can have less on-campus housing in comparison to the number of students attending. However, they may have a higher percentage of local, part-time, or commuting students who do not need a house close to campus. So, despite the larger student body, the actual demand for student housing may be comparatively lower. These are all important facts that influence a decision to invest in student town housing. So, you should do your homework, before speculating on rental property in student towns.
It is just as important to evaluate the area’s available investment properties to ensure that any potential options have features commonly found in profitable rentals. The condition of the house and the encompassing region are some of the essential aspects. Crime rates, amenities, age of the house, and most recent updates will all directly influence your ability to attract tenants and charge a competitive rental rate.
Another relevant aspect is understanding the tax implications of your purchase. The amount of property tax, both current and future, must be included in the cost of owning the property, as would any required homeowners’ association fees. You must also monitor for any restrictive codes or laws that might prohibit you from renting out the property; each city and town has its own set of regulations that can vary vastly from place to place.
Real Estate Investing: The Pitfalls Of DIY Property Management.
Eventually, if the numbers add up, and you choose to go forward with a real estate purchase in your chosen location, you need to factor in your investment spend, the risk-reward equation, and the overall cost of property management. Having a rental property is a full-time responsibility, especially if you intend to be a DIY property owner. Rental homes in college towns are unique in that they have a high tenant turnover. If students are the target demographic, it’s important to remember that there is a lot more work required in managing the property. Marketing, screening, leasing, and managing your property from year to year, perhaps even semester to semester, will take away precious time. And it comes at a cost.
Then again, if you intend to rent to graduate students or faculty, marketing your rental effectively will vary considerably, given the older demographic. Regardless of who your target renter is, it is important to be realistic about your ability to provide consistent and high-quality property oversight and maintenance. As any property manager will tell you, this is a hands-on job. And one that requires full-time availability should an emergency arise. So, as a DIY property manager, you would have to limit your services to the areas that you can access quickly or regularly, close to your hometown.
How We Can Help?
The alternative to doing it yourself is to hire a quality property management company to manage your property for you. There are real benefits to doing so, especially if you plan to rent to students. Placing ads, interviewing renters, showing your property, performing routine maintenance –a team of professionals dedicated to protecting the value of your investment property, manages all this. And with a national company like Real Property Management Premier, you can widen your investment options. Our nationwide network of reliable property management offices serves customers from coast to coast.
At Real Property Management Premier, we can help property investors like you decide if buying one or more rental properties in a college town makes sense. We have market data and industry experts who can provide the information you need to make the best possible decision. Contact us today for more information.
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