The Pros And Cons Of Investing In Student Housing Rentals
CT
Homes said recently, “Some of the best investments require a leap of faith.
You have probably heard for a while that to make money in real estate; you need
to think outside the box. One of the most out of the box buy and hold
opportunities is with student housing rentals. On the surface, these may seem
like more trouble than they are worth, but when you break down the numbers, the
ROI can be through the roof. There are the pros and cons of
investing In student housing rentals;
Like any other investment, choosing the right location and quality management are critical to success. For every investor who despises student rentals, there are a handful that sing their praises to anyone that will listen. Like anything else in real estate, it is essential for you to do your own diligence and gather all the information prior to making a decision. Here are a few pros and cons of investing in student housing rentals.”
The Pros And Cons of Investing In Student Housing Rentals
Pros
- Large Rental Pool: An investment in a college town is an investment in education. Nothing has grown more over the last decade than the cost of college and the need for higher education. When you buy a rental near a school, you have a built-in rental pool. This could mean thousands of students literally may want to rent your property.
- Consistent rent prices: Rent prices greatly influenced by supply and demand. Since student rental properties are typically in demand, it means that you should be able to charge market prices and get them year in and year out.
- Vacancy reduction: Vacancies with student housing rentals should be minimal. The key is to adjust the dates on the lease to start on June 1st. This allows you to avoid any vacancies for June and July and keep a solid 12 months of rent. Additionally, for a house they really want, the extra two months of rent is a minimal expense.
- Property Appreciation: Appreciation is the goal behind investing in anything. You want your money to grow during your period of ownership. Properties in college towns tend to enjoy steady and significant appreciation. The schools help to support local economies.
Cons
- Turnover: If you are lucky to get a junior interested in your property, the max time they will stay there would be two years. A more common scenario is to rent to seniors who will stay for just one year. This leads to plenty of turnover. That means you will have to find new tenants every year, which means plenty of showings, marketing, applications, and documentation.
- Maintenance: The biggest reason that most investors stay away from student housing rentals is maintenance. Students will not treat and take care of the home, and appliances, the same way a newly married couple would. The couple knows they want to live in the house for the foreseeable future where the students know they are out at the end of May.
- Management: If you own a student rental, you should expect a higher need for management. You are renting to young adults who have never lived away from home before. You can expect to make a trip to the property at least once a month for something that is a relatively simple fix. Most students are well intentioned, and things will go smoothly, but there will also be a lease that can make you second guess ownership.
- Enrollment is usually higher at public schools than at private schools, so you might have more of a tenant pool to pull from. But by the same token, public schools tend to attract more commuters who won’t need an apartment because they’re living at home with mom and dad.
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