The Smart and Gutsy Invest in Student Housing
Plenty of landlords avoid renting to college students, envisioning drunken all-night boozefests, a rotating door of overnight guests and extensive property damage. But seriously, why overlook a perfectly good market because of a certain percentage of bad apples? College student housing is one of the most stable and reliable investments a person could hope for. The market is constantly being replenished with more demand so the availability of renters is never in question, no matter the condition of the housing market.
In some cases, there is simply nowhere near enough on-campus housing to meet demand and nowhere near enough money to build more. Colleges often encourage their older students to migrate off-campus, thus making room for incoming freshmen on campus. For instance, look at the University of Florida, where about 80 percent of the student body lives off campus. Nearby residential complexes can charge up to 30 percent higher rent than similar facilities farther away from campus. In fact, some parents in that area are plunking down anywhere from $125,000 to $500,000 to purchase condos for their college students, the Palm Beach Post reports. This from one area real estate agent, who gets 75 percent of his sales off student housing deals:
“I’ve shown parents a (smaller) condo, and they say, ‘My God, my child cannot share a bathroom!’ ” says Don Daley, a Coldwell Banker real-estate agent in Gainesville. “That just shows you (a change) from 30 years ago.”
The drawbacks to managing student housing: Rents can be harder to collect, students tend to be very transient and property wear and tear tends to be higher.
The bright side of managing student housing: Higher rents, property quality is less crucial and the investment is generally recession-proof.
Add to that the facts that the current generation of college students are staying in school longer and college enrollment is expected to increase 11 percent from 2003 to 2013, according to the Los Angeles Times. While it’s certainly not for the faint of heart or the exceedingly busy, student housing can be very lucrative. Be willing to invest the time needed to oversee property and protect your assets, and follow the general landlord rule of thumb - screen tenants, check backgrounds and follow your heart.
