Student housing investments offer a unique blend of stability and profitability. They are a reliable sector that often sees steady growth, especially during economic downturns.
Additionally, students typically sign one-year leases that are easily renewed each year. Unlike traditional tenants, students rarely default on rent payments. However, investors should still run a thorough tenant application and screening process.
Equity
Student housing is often counter-cyclical, meaning it performs better during economic downturns. It can also be a great way to diversify your portfolio.
One of the key factors to consider when choosing student housing investment opportunities is location. You want to invest in property close to the university, cafes, local nightclubs, and workplaces.
This will allow you to attract students and maintain high occupancy rates. Market behaviors can also reveal the features your property should have to maximize revenue potential. Consider working with a real estate investment professional like David J Adelman, who specializes in student housing investing. This may come at an extra cost, but it can provide more pointed insight into this specific sector of CRE. This can ultimately lead to higher returns on your investment.
Location
Student housing can be single-family homes, duplexes, or apartments, and choosing the right location is important. Choosing a property near the college or university increases your chances of high cash flow and low vacancy rates. Ensure that you are aware of landlord-tenant laws for the area.
Around 14 million students nationwide attend a four-year college, and they need somewhere to live while they study. This makes student housing a highly desirable investment opportunity with consistent and predictable demand.
Most colleges don’t have the resources to provide on-campus housing for all of their enrolled students, so demand remains extremely high in neighborhoods surrounding campuses. Investors can capitalize on this demand by renting student housing properties by bed rather than by unit, which allows them to maximize rental income.
Demand
Student housing is an attractive investment opportunity for diversifying their portfolio. This real estate sector offers investors many benefits with consistent demand, high yields, and relative recession resistance.
It’s important to research universities with stable or increasing enrollment numbers, as this indicates a steady need for off-campus housing. Additionally, look for schools that offer desirable amenities, such as study rooms and fitness facilities, to attract students.
Most students live with roommates, allowing landlords to charge a lower rental price per unit than they would for a single-family home. In addition, students can typically afford the rent with help from their parents. This makes them an ideal tenant. They are also reliable and usually on time with payments.
Income
Student housing offers consistent revenue streams if you want to diversify your CRE portfolio. Students prioritize education over other expenditures, resulting in a steady demand for college housing even during economic downturns.
Since students often need credit histories, many require co-signers to guarantee rent payments. These guarantors can be parents, siblings, or friends. Knowing that your investment will produce an income stream can reduce overall liability risk and give you peace of mind.
Students also tend to live with roommates, which can increase your total rental income. You can charge more per bed if your property is home to four college students who each pay $600 per month. This makes student rentals ideal for investors looking to maximize their returns. The information on this site should not be construed as legal, investment, or financial advice.
Taxes
Student housing is a subsector of CRE that offers investors an attractive return on investment. The industry benefits from higher college enrollment rates, which leads to an increased demand for residential accommodations.
Unlike traditional apartments, student housing typically features multiple bedrooms, which allows investors to charge more per unit. It also caters to a distinct demographic that may require specific amenities such as high-speed Internet, study rooms, gyms, and proximity to campus.
Student housing also offers a lower risk profile, as tenants usually sign shorter leases corresponding to university semesters. This reduces the likelihood of vacancies and increases rental income. However, it’s important to diversify your portfolio with other types of properties. If a local economy struggles, you can still generate revenue from other sectors.
