Investing in college housing is a great way to get started in this business. Even though there are a few negative aspects, it can be a very smart investment if done the right way.
Here are a few of the reasons why you should consider investing in college housing:
College Kids Always Need a Place to Live
The constant influx of kids going to college probably won’t go away any time soon. And even though many of them will live on campus, there will always be those (especially older students) that want to get out of dorms and move into someplace off campus.
That’s where you come in.
Whether you decide to purchase a condo, single family home or duplex is up to you. The point is that you shouldn’t have much difficulty keeping it occupied as long as it’s reasonably priced and in decent shape.
Mommy and Daddy Pay
Even though some college students have to pay their own way, the vast majority of them have their parents helping. That means a consistent source of income, so you don’t have to worry (as much) about the rent coming in.
That said, you should look into the student’s job/income methods when they apply to live in your property. Even if they say their parents will be paying, you should consider talking to their parents directly to make sure all of the ducks are in a row.
Offset Your College Kid’s Costs
If your own child is at college, investing in a home for them is a good way to help you offset your total bill. For example, let’s say you purchase a 3 bedroom home for your child to live in, and the total mortgage is $1,500 a month. If your student’s friends live in the extra bedrooms and each pay $750 a month, your student gets to live rent-free!
Granted, someone has to pay the utilities, but this is the most beneficial (and most common) way to start investing in college housing.
But it isn’t always sunshine and rainbows. Here are a few negatives about renting to college students.
College Students (Sometimes) Party Hard
Some college students have a party at their house every weekend and trash the place.
Others are extremely kind to the property, treating it as their own.
The toughest thing about college housing is judging someone’s character just based on their application and talking to them for a few minutes. Just because someone acts extremely professional doesn’t mean they won’t damage your property.
The longest you can expect students to rent your place is 4-5 years… but it usually won’t be nearly that long. Investing in college housing brings the risk of high turnover, as students are constantly moving in and out due to several factors.
And even if you do have one or two steady tenants, there’s a very good chance the third (or fourth or fifth) will constantly be rotating.
This is primarily an issue during the summers. If the students don’t want to stick around campus or their parents just don’t want to pay the extra rent, expect your tenants to start moving out in April and May.
So is College Housing Investing Worth it?
The short answer is yes. Besides doing a lot of research before purchasing the home to make sure you get a great deal, you just need to plan to screen possible tenants coming in very well.
But that’s a necessity for any rental property, which is why so many people choose to use property managers.