Investing in college housing has been a hot trend in Real Estate but what are the real pros and cons?
Investing in college towns is a profitable niche for real estate investors across our growing nation. Good schools, booming local businesses and growing communities make up good fundamentals for real estate investing.
Investing in college towns is going main stream, major players (private equity) and big home builders are getting in on this profitable niche with deluxe dorms.
The Pros of Real Estate Investing in College Housing:
•Good publicity! Investing in college housing can be seen as a form of social good, helping to fuel education.
•Multiple tenant housing and rooming can result in much higher rents per unit.
•You might get your kids’ college housing for free or at least save on the expense.
•You could get bought out by the college as it desires to expand and soak up more land.
•Most students aren’t demanding tenants.
•Individual vacancies will make little impact on overall returns and cash flow
The Cons of Real Estate Investing in College Housing:
•Student loans are still defaulting at an unsustainable rate, can become a landlords concern.
•Students with higher education are unable to get jobs with their degrees and dropouts launch multibillion dollar businesses, this is creating a shift in trends and future demand.
•Property maintenance can be a nightmare; I mean, your tenants are students after all.
•Students can be extremely unreliable tenants and you may have to deal with parents too.
•Colleges (for example in Connecticut) can push local government to seize property by eminent domain for expansion.
•Challenges can be overwhelming if you invest too far from your base of operations; handling property management from a distance