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The Skinny on Student Housing Income Property

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Student housing

One of the more overlooked segments of income property investing is student housing.  College towns offer a steady stream of prospective tenants, and their local economies tend to be stable and vibrant.  Of course, like any investment strategy, this one has pros and cons.

One downside of managing college student properties is that it is generally more labor-intensive than other real estate niches.  The main reason for this is that there is a high level of turnover.  Higher education’s 2 and 3 semester systems mean that you’ll be lucky to have your apartment rented out for an entire year.  So you’ll have to spend more time recovering from former tenants as well as finding new ones.

Another downside is that your property costs will be higher.  Let’s face it; college kids really don’t give a crap about your property.  I know this, because I’ve seen it with my own two eyes.  I lived in off-campus housing for 4 years and most of the properties I encountered were in pretty poor condition.  So in general your repair bills will be higher with student housing.

The third major downside is stress.  In addition to the higher turnover and expense base, inevitably parties will get busted, injuries will happen, major damage will occur, and other chaotic events will happen from time to time.

However, although the tone of this post so far has been pretty gloomy with regards to student housing, I actually think it can be an effective option.  Generally, you can get pretty good deals on these properties because the seller will often be eager to dump the property due to the aforementioned downsides.  Additionally, your property income will be higher with student housing because usually multiple students will be living at the property.  This in turn will allow you to handle the higher repair costs, and should allow you to hire a rental property manager so you can rid yourself of the stress and aggravation.

In the final analysis, if you live near a college town, and you have a strong stomach, college investment properties are definitely worth looking into.  The numbers are usually much better compared to traditional multi family rental properties because the buying prices tend to be lower and the monthly rent rolls are higher.  This in turn allows you to hire a property manager and essentially turn it into a passive income stream.  Now THAT is what I would call a great investment!

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