What’s the latest trend sweeping the schoolyards today? Contrary to what you might think, it’s a far cry from Bieber Fever or dabbing on the dance floor.
No, this trend is much smarter. Yet, it’s not taught in the classrooms and lecture halls of today’s college campuses. In fact, the only commonality it shares with universities and educational institutions alike is the location.
Curious? It’s the growing trend of investing in college town real estate. In particular, many individuals are buying rental properties as a way to save money, cut expenses, and, in some cases, even turn a profit.
Sounds almost too good to be true, right? Well, if you’re interested in learning a little bit more about this up and coming investment option, read on. We will break down the basics of buying college rental real estate and help you decide it its right for you.
What Does it Involve?
Here’s typically how parents and students pursue this type of investment option. It starts by locating an ideal rental property in or around the community where the institution is located. Generally, it’s recommended to find a living facility costing no more than $200,000 with three to four bedrooms. In essence, big but cheap. This is because the intention of the purchase is to rent out the extra rooms to other students. College students, a population of young adults who are notoriously bad tenants and destructive residents (hence the low property value). For the next four years, the attending students live at the property while simultaneously acting as landlord to his or her fellow roommates. Then, once graduation has come and gone, the property is put back on the market or kept as a means of income, depending on how the renting and buying markets fair.
What are the Benefits?
Buying rental property in college towns has two big benefits. First, it eliminates the often exorbitant expense of on-campus living. Recent statistics indicate that today’s college pupils spend anywhere from $7,000 to $15,000 per year on student housing, which can amass to as much as $100,000 by the time graduation rolls around. Because the majority of those parents and/or students who buy college rentals end up breaking even, the entire venture sidesteps the need to pay schools, whether it’s Loyola Marymount University or WSU Online, for use of their dormitories and facilities.
Second, buying rental property adjacent to colleges can actually turn a pretty profit. Due to the growing demand for college education, rental rates in the communities outside of universities are climbing to heights never experienced before. On the other hand, buying homes is more affordable than it has been, due to the residual effects of last decade’s financial crisis. This combination makes for the perfect opportunity for rental-purchasing investors.
What are the Risks?
Every investment has its risks, whether in real estate or in the stocks, in relationships or in the roulette wheels of Reno. Fortunately, the risks of real estate in college towns is minimal, as education will continue to drive up local rent rates and recent projections indicate an upswing in the housing market. Turning a big profit might not be a sure bet, but you can count on this kind of investment as being one on the safer side.
Should I Invest in Rental Real Estate in My College Town?
Deciding if this venture is appropriate for you depends on a variety of factors. There has to be enough capital to make the initial investment. There has to be the right people who can act as landlord and property manager. There has to be a willingness to endure risk and put forth extensive research. In short, it takes work, time, money, and involved commitment. If you have those, then it might just be the smartest trend you could try.