Searching for a great real estate investment opportunity? Look no further than your local college town. With a steady supply of short-term residents moving in every year, owning a rental property near a university can provide stability for your keep-and-rent strategy.
According to RealtyBiz News, student populations will swell to 23 million by 2020, including both undergraduate and graduate programs, and the number of international students coming to the U.S. for study will continue to climb. In the past eight years alone, international student populations have grown from 200,000 to 764,000; the upward trend is expected to continue.
Homes rented out to students could be a great investment, and when done correctly, homes in prime areas near campus rarely remain vacant. So how do you go about investing in real estate in a college town? To keep your property profitable, and your life easier, make sure to avoid the pitfalls by following these simple guidelines.
Choose your property carefully: Look for a spacious property close to campus. Even if rent is a bit higher, if students and their parents know that campus is just a short walk or bus ride away, they’ll feel more comfortable about choosing your location.
Choose your tenants even more carefully: Some investors in college towns (and their neighbors) aren’t too happy to find their homes turned into party central. By carefully screening tenants and including specific tenant rules in the lease, you'll protect yourself and your investment.
Rent by the room: Although you may not be able to get one tenant to pay the full rent, you can have multiple students living in a house while collecting the rent by the room. You may even increase your ROI by renting this way.
Be prepared for tenant turnover: This isn’t necessarily a bad thing, but expect your student tenants to come and go frequently. This may put more burden on you to find replacements, but rest assured, you’ll have no shortage of applicants and you can always have a property management company handle this part of the process.
Involve the parents: Many college students will not have the rental history or credit score you may find in established tenants. But don’t fret, their parents will typically be able to co-sign, and since they are likely the ones sending the check, starting a relationship with them will only increase your success.
Be familiar with the area: If at all possible, invest close to home, or close to a college where you know the community, rent values and most populated student areas. Many investors are having great success (and a lot of fun) investing near their alma mater.
For a list of the fastest growing college towns nationwide, click here.