Few real estate rental markets can offer the kind of consistent demand for rental homes found in a college town. But there is a lot to know before deciding to invest in rental property in these areas. No two college towns are exactly alike, and different types of institutions will affect an owner’s ability to competitively lease off-campus housing. But with steady demand and a tendency to appreciate well, investing in one or more rental homes close to a college or university can be an effective way to achieve your long-term financial goals.
All over the United States, each and every college city has that one common denominator: the students, faculty, and staff who live there all need housing close to campus. This unwavering demand can make buying an investment property in a college town seem like an attractive option. While this is often the case, there are some important factors before starting your property search.
Case in point, it would be a good idea to research the campus and surrounding community first before you select one town over the others. Accumulating information on enrollment history, the projected growth of the school, current and projected ratio of students to on-campus housing, and any planned developments can help you estimate the current and future potential of any given area. If a school has shrinking enrollments or is opening a second campus in another community, both could cause a sharp decrease in demand for off-campus housing. Information like this is significant to have before investing in any university community.
One more significant factor would be the type of institution that is at the core of the town or city. Private universities and colleges may have strict housing policies and more on-campus housing available, thereby reducing the need for off-campus options. Public universities, on the other hand, might have less on-campus housing when you factor in the number of students attending, but may have a high percentage of local, part-time, or commuting students who do not need or want to house close to campus. These are all things you ought to do your best to find out before deciding whether to buy a rental property in a college town.
It is just as important to evaluate the area’s available investment properties to ensure that any potential options have features commonly found in profitable rentals. The condition of the house and the nearby district are among the most important factors. Crime rates, amenities, age of the house, and most recent updates will all affect your ability to attract tenants and charge a competitive rental rate. Another important aspect is understanding the tax implications of your purchase. The amount of property tax, both current and future, must be included in the cost of owning the property, as must any required homeowners’ association fees. You should also inspect for any restrictive codes or laws that might prohibit you from renting out the property; each city and town has its own set of regulations that can vary widely from place to place.
Should your research be promising and you make the decision to pursue a real estate purchase in your chosen location, you can significantly narrow your search parameters if you decide early on how much you want to spend, how much risk you can comfortably assume, and how much time you have to devote to property management. To own a rental property would demand a lot of your time, especially if you are planning to do most of it yourself. Rental homes in college towns are somewhat unique in that they usually have a high rate of turnover. If students are your target demographic, it’s important to understand that there will be a lot more work involved in marketing, screening, and leasing your property from year to year, perhaps even semester to semester. Then again, if you plan to rent to graduate students or faculty, you will need to know fully well how to market your rental effectively in order to entice them to your property.
Regardless of who your target renter is, it is important to be pragmatic about your capability to deliver consistent and high-quality property oversight and maintenance. Property management can be a very hands-on occupation, one that would entail your full-time availability in case an emergency should happen. If you want to manage a property yourself, you are also restrained to areas that you can access as soon as possible or regularly, often relatively close to your own hometown.
The other option to doing it yourself is to contract the services of a quality property management company to manage your property for you. There are real benefits to doing so, especially if you are planning to rent to students. Placing ads, interviewing renters, showing your property, performing routine maintenance, handling move-in, and move-out efficiently – all of these can be turned over to a team of professionals dedicated to protecting the value of your investment property. What is more, if you choose a national company like Real Property Management Magic Valley, you are not limited to buying in your home market. Your investment options are wide open with the help of a network of reliable property management franchise offices coast to coast.
At Real Property Management Magic Valley, we can help property investors like you decide if buying one or more rental properties in a college town makes sense. We have market data and industry experts who can provide the information you need to make the best possible decision. Contact us today for more details.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.