The Rising Demand for Student Housing Means Profits for Investors
August 14, 2017
In a bid to secure the future, investors often explore the possibilities of purchasing investment properties and rent it out in order to generate more income from it. According to a recent survey by Better Homes and Gardens Real Estate, 89% of investors in the U.S. are interested in putting their money into real estate. Mostly, the focus of the majority of real estate investors focuses on renters who need a place of residence close to business districts or quiet areas that are best for raising new families. However, this market is highly competitive and properties need to be of a high standard with excellent characteristics that will attract potential rentals who seek quality and one-of-a-kind place of residence.
Whereas, there are lots of opportunities in the student housing market, many investors often overlook this. Located close to colleges, schools, and universities are housing units that offer amazing accommodations for students during their academic years. Properties closer to colleges with conducive and comfortable living and studying environment often attract students who are interested in renting a secure place during their schooling days. The number of students enrolling in higher education continues to rise, which means that the demand for student housing is increasing as well. The National Center for Education Statistics predicts that college enrollment in the U.S. will reach 19.8 million students by the year 2025.
To most parents, college is all about spending money. However, to a number of savvy investors, college is a way to make money rather than spending because all students need a place to live. With the incessant increase in the number of young people enrolling yearly for higher education and the state-budget deficit which meant a serious shortfall in college-owned housing and hostels, why shouldn’t you invest in college housing? The state’s budget for universities and states are more concentrated towards recruiting more professors and renovating older classrooms. Private investors are relied upon for the provision of off-campus housing.
There are basically 2 ways by which you can approach the students’ housing market. This first approach is to invest as an owner this property while the second approach is to be a manager of this property on behalf of the owner. Michael H, Zaransky, author of Profit by Investing in Student Housing: Cash in on the Campus Housing Shortage (Kaplan Publishing), stated in 2006 that over 80 million of people will turn 18 by 2017. He proceeded that the easiest and more affordable way to get started with students’ housing is to purchase a condo or single-family home around the college area and rent it to students.
No wonder, first-time investors accounted for 34% of 2016’s student housing transactions. More so, in 2016, student housing transactions reached record levels -- $9.6 billion according to Real Capital Analytics. This was up 62% from 2015 and amounted to three times 2014’s total.
Nevertheless, keep in mind that investing in aged and older houses may not have the essential amenities required to support student’s life. You chance of being successful is increased when you invest in properties that offer student tenants private baths and toilets, spacious rooms, storage facilities, air conditioning, cable television, and high-speed internet access.
However, hiring a professional housing consultant and property acquisition expert will assist you in selecting and purchasing the right properties for your investment. Also, property management companies serve as a link between landlord and the student tenants. The work assiduously to ascertain the type of properties students wish to live in, type of occupancy, price range and number of rooms needed, and specific housing characteristics that students would love in their college.
With the rate at the colleges are welcoming new students, there will rarely be any lack of interest in students' housing units. Hence, real estate investors who dream of having a steady flow of income will want to consider and explore this huge opportunity. Also, hiring a property management and acquisition specialist to handle various housing concerns will make the acquisition and managing of these properties much easier.