Any residence with two or more units in the same building is referred to as a multi-family property or multi-dwelling unit (MDU). This kind of home comes in various structures, including the,
Read This Before Investing In A College Town Rental Property
Dated: July 16 2020
College town rental properties are one of the most sought-after rental property investments. The reasons for this are quite a few, but most importantly, the market is booming. The United States admits up to 80 million students into various colleges and universities every year. Based on these statistics, rental property investment opportunities are bound to arise, especially in college towns. This is why we see California, Nevada, Georgia, Texas, and other college towns boast strong economies and thriving real estate markets, thanks to the influx of students and faculty staff.
Are you looking to take advantage of these booming markets?
You are on the right path. Like every other investment property out there, there are advantages and disadvantages of investing in a college town rental property. That said, you can enjoy high ROIs if you go about it the right way. How stable are college town investments? Compared to other investment types, you get a decent level of stability when you invest in college town rental properties. While it is impossible to avoid economic fluctuations, the economy of college towns enjoys the support of the college’s cash influx. Another reason for the steady property rental rates in college towns is the high demand. Rather than compete in a tenant-short market, the landlords work with market-rate property prices. The slight fluctuations are experienced during breaks, due to the absence of most students.
However, landlords can mitigate this by renting their properties to short-term tenants like visiting professors and international students, pending students’ return. How easy is the running of college town investments? Do not make the mistake of treating college rental properties as passive investments. It becomes passive if and when you hire a property manager to oversee it for you, at the cost of a fraction of your income. Not everyone is cut out for dealing with issues stemming from property management. Likewise, people may have other vital businesses to handle. For these reasons, outsourcing the running to capable hands is the right call. All you have to do is shop for a reliable property management firm, offering professional advice when needed. If you find their charges above your budget, you may opt for a student property manager. When taking applications, prioritize good, verifiable references, and experience.
How safe is it to rent to students?
Safe, comfortable, and private apartments are always in high demand in college towns. This is because most new students are not used to or cannot cope with the tight campus residences. They just want something better and warmer. Therefore, renting your rental property to such students should not be a problem. However, you must have them enter into strict but clear tenancy arrangements, alongside verifiable references. To be on the safe side, have their parent or guardian serve as one of the references. They may also co-sign the agreement as a surety. You should keep a percentage of the rental income you get for maintenance purposes. You don’t want your tenants stranded when an appliance breaks down or when it is time for routine repairs.
Lastly, get a renters’ insurance for your college town rental property. This will have you covered against major damages (if any). Are you better off with just one student tenant? There are two sides to this – negative and positive. The positive here is that just one student tenant translates to less stress, fewer damages, and less disturbance. The negative is that you may not record any rental income if the student leaves town or is unable to pay rent. If you are renting your property to multiple students, you will get constant and more rental income from multiple sources. However, you must be prepared to spend more on the management and maintenance of the property. Multiple tenants mean multiple ambassadors of your rental business, as they will most likely attract more customers for the next semester. What are the right investment properties in college towns?
While there are a couple of investment options to choose from, your decision is often influenced by your financial capability and the rental market trends. The prices of properties vary across different college towns. Hence, you may have to consider your budget when looking for a college town to buy your rental property. You should also factor in other expenses like fixtures, insurance, and management fees when deciding. Another determining factor here is the proximity of the property to the campus. Rental properties that are closer to the campus are usually expensive compared to those situated farther away. That said, you can make more money from the former because the demand is always high. Talking about the market trends of the area, you may need the help of a local real estate expert to understand the market trends. For instance, the demand for multi-unit properties is higher than that of single units in some college towns.
This is because the students prefer to live together in groups. In other cities, the hottest rental properties are single-family homes. Final Thoughts Irrespective of your chosen college town or investment property type, ensure that you are in the business for the right reasons. The college town market is fast-moving, and you have to stay on top of your game to thrive. Also, like any other investment, information is key in the college town rental property business. This is why you should prioritize adequate research on market trends and collaborations with local real estate experts in the area for other important insights. Good luck.
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