Students are looking for housing that is both affordable and close to campus. These characteristics make student apartments a great investment opportunity.
Investing in student housing, like David Adelman, can provide strong, risk-adjusted returns even with rising interest rates. Learn how Campus Apartments maximizes returns in this competitive market.
Higher Rental Rates
As you may have already discovered, renting student apartments is a lucrative business model. Savvy investors are often drawn to these investment properties during the off-plan phase when they can purchase them at a fraction of their eventual value.
Students typically don’t demand the same luxuries that long-term tenants expect. They are usually more concerned with things like proximity to campus and parking.
You don’t have to spend as much on property upgrades to appeal to your students. And since most students have lived in dorms before, they aren’t as picky regarding paint quality or flooring. Likewise, they don’t usually have the same expectations of privacy that some long-term tenants might. They live alone or with roommates and don’t have to worry about a house full of guests and parties.
Lower Maintenance Costs
Some real estate investors are wary of investing in student housing, particularly in college towns, due to the perception that these tenants are reckless and risky. However, there are ways for investors to mitigate these concerns and increase their security. For example, requiring a high-security deposit is a good way to deter students from risky behavior and ensure that they pay their rent in case of damage or default.
Moreover, although students are not required to have credit or income history when renting apartments, investors should still use thorough tenant applications and screening processes. This helps them find quality tenants and maintain the property’s integrity. Additionally, students typically prefer living in apartments because they offer more privacy than dorm rooms and allow them to entertain friends without worrying about noise violations or curfews.
High Tenant Turnover Rates
Many students choose to live off campus because it saves them money compared to living on the school grounds. This is because the cost of living in a dorm typically includes a meal plan and utilities they wouldn’t pay for if they lived in an off-campus apartment.
Unlike dorms, apartments have year-long leases that can require furniture and utilities to be paid in advance. This is another reason why the tenant turnover rate for student housing is higher than in other markets. However, this turnover is necessarily a good thing. Landlords focusing on resident retention can reap the benefits of a consistent rent roll and lower expenses. This can maximize returns in the long run.
High Demand
Students seek housing with a sense of community and quality accommodation. This is why mixed-use student housing developments incorporating residential, hospitality, and commercial spaces such as restaurants and groceries have become popular.
Apartment living gives students more freedom than dorms, allowing them to relax and focus on their studies. But it’s not without its drawbacks. For instance, students may need to pay for utilities and internet connectivity while dealing with yearlong leases (though some landlords might include these fees in their rent).
However, the demand for campus apartments continues to be strong. As such, investing in these properties can provide great returns for investors. They can also be a good alternative to traditional single-family home rentals for families with children and young adults.
Higher Profits
While some investors are hesitant to invest in student housing, it’s important to understand the market trends and ensure you’re investing wisely. Conducting a thorough market analysis and focusing on property maintenance can help maximize profitability.
Unlike single-family homes, which depend on one tenant for most of their income, student housing rentals provide multiple sources of revenue. This gives investors more flexibility when determining rental rates and maximizing profits.
Choosing the right location is also critical for student housing investments. Properties within walking distance of the university and near public transportation hubs will have a better chance of attracting tenants. Additionally, offering various attractive amenities may increase your property’s appeal and improve its overall profitability.
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