Many people make millions of dollars investing in real estate. From house flipping, to investing as a silent partner in real estate investments – real estate pays. But what about the hidden gem in real estate that experienced investors are taking advantage of – and in a BIG way. With the ever-increasing demand for student housing, real estate investors, and even universities, are gobbling up student housing to the tune of billions of dollars a year.
The number of people enrolling in higher education continues to climb each year. The National Center for Education Statistics predicts college enrollment in the U.S. will reach 19.8 million students by 2025, an increase of 14 percent from its 2014 enrollment of 17.3 million. With an ever-replenishing tenant base, the communities surrounding college towns are starting to allure savvy real estate investors who realize the huge potential for gains.
Despite the lure of positive numbers and a never-ending pool of prospective tenants to choose from, many investors turned landlord are quickly realizing that managing these properties is very different from managing other rental properties. We all know college kids can be irresponsible, uncooperative and downright destructive when dealing with their college rental housing. Let’s face it, dealing with their landlord is not a priority for them.
However, while many factors may be out of an investor’s control, avoiding this profitable rental market is a big mistake. The best way to reap the rewards of investing in student housing, while keeping sane, requires the assistance of an experienced and knowledgeable property manager. Property managers experienced in college town rental properties are best equipped to deal with the special dilemmas that come along with investing in student housing. Off-campus student housing has a unique set of obstacles that are best dealt with by those who have professional experience.
Many landlords don’t realize that the majority of off-campus student housing has very high turnover year-over-year. It really takes a certain tolerance level to succeed in making these rentals as profitable as they can be. Property managers who have perfected this market are really able to make a significant difference and get their owners low vacancy rates, increasing rents and generate high profits.
There are many relationships at play in this unique rental market. Not only do landlords have to consider their student renters, but also it’s important to also consider their student renters’ parents, who are, more times than not, the ones footing the bill and writing the rent checks. A good property manager in this market knows that it’s key to develop strong relationships with both students and parents. Parents can be your best advocates in situations where you’re dealing with unruly tenants. They can encourage their kids (your tenants) to maintain the property respectfully, which is one of, if not the biggest, concern when investing in off-campus student housing.
As more and more real estate investors realize the profit potential sitting in college towns, rentals face more and more competition. Oftentimes investors see competition in rental markets as a way to lower rental prices. However, students don’t only look at price when determining where they’ll live off-campus. And parents especially take other factors into account such as security, cleanliness and even the landlord or property manger themselves. Who wants their college kids living in a place that has a creepy landlord? Investing in college towns can be a very profitable venture when you are equipped with the right property manager. But investing in this market without one, is a venture not for the faint of heart.