Anyone ever try to develop a "dorm" type building for college students?

Question

Colleges make a lot off of housing. It seems a privately developed one could charge a lot less than the 4-700  a month that students pay to stay in those.

Iv thought about this a lot and it could be a relatively cheap building considering you would have central kitchens and bathrooms.

2 to a room at 150 a month a piece.

300 per room. 200 square feet per room and thats pretty good sized.

Could make a lot off rent with say a 12-16 room building.

2400-3200 square feet living space plus bathroom/kitchen/laundry

3600-4800 a mo in rent.

What you all think of something like that?

Im guessing that it would be nearly impossible to get permits for something like this, and maybe thats why iv never heard of it before.

Kevin Prigge · Answer

Travis, there was an article today in the UofM newspaper about some private student housing going up for next year.

http://www.mndaily.com/2011/03/30/apartments-rise-vacancy-stays-flat

Shawn Shaw · Answer

Travis,
There is a niche market for this type of student rental housing that is growing quite well.  These are highly amenitized resort-style props.  There is a local (San Diego) company [LINK REMOVED] that specializes in this market.  Google them and you will see a number of other players, as a result.
For your situation, you could borrow some of their ideas on how and who to market your props.  One idea is to focus on the female student...Daddy wants them in a safe location and is willing to pay for it.  :D  Usually signs for their daughter's lease for a 12-month stint and guarantees the payment and any damages incurred by the "apple of their eye." 
Doing your research and due diligence will help with investors, if that is something you are considering.
As someone else has mentioned, check the zoning rules in your area.  Again, in SD, at SDSU, there was a proliferation of "mini-dorms" that caused a big uproar.  Zoning requirements were changed to put a squash on these type of properties.  But, if you are one of the "first to market" you could enjoy the time and make hay while the sunshines, if you catch my drift.
I hope it's a successful venture for you.

Danny Day · Answer

Cool idea Travis.

One thing you might want to look into is the schools rules & regulations. Some schools will make you live on campus for X number of years. When I was doing multi-family student housing development, this is how we picked what campus to move into.

Each (public) school is required by law to post numbers and percentages of people in each class on campus. Something to think about as it could pose a risk to your business model.

None the less, this could very well turn into something great. I would recommend taking on some local students and gathering their ideas.

Good luck!

Zach Sikes · Answer

I'm in Edmond, OK.  We have a school here of around 17k students.  It used to be mostly a commuter school, but recently has been developing more traditional students.  Some guys built a student housing complex, and are making a killing.  4 Bedroom apartments, fully furnished, all bills paid, for 450-500 month per person.  So, a fully rented unit grosses 1800 month.  New students love it with no on-campus rules, and the investors love it too.

Account Closed · Answer

depending on the area, that could be breaking the law....some areas with 3 or more unrelated tenants is considered a boarding house which is usually illegal...a lot of investors do it and stay under the radar, but it'd really suck when they come down on you, and your entire portfolio is built of these illegal college boarding houses!!

Kyle Meyers · Answer

I am a college student and Indiana University in Bloomington, IN. Students are required to live in the dorms their first year and most move out of the dorms after that for a cheaper larger space. I don't know if a private dorm would work well since people mostly do not live in the dorms by choice, but I think in limited quantity their could be enough demand with the low rents you were considering. In this area the properties that seem to do the best are the small 1 bedroom and studio apartments that students can rent for cheap, and their are some large houses that rent to 4 or 5 people so the per person cost is not too high. In the city their are occupancy permits required that allow 3, 4, or 5 unrelated tenants. I am sure it varies by school.

Jeff S. · Answer

There is a guy in Portland that buys large houses and remodels them first cabin, granite, the works and adds bedrooms, renting each to college kids. He has done well.

Travis Bill · Answer

Interesting. Thanks Zach. I wonder how he handles the summer? The leases are probably 12 months but maybe 9?. Or maybe rent is discounted in the summer to entice students to stay?

Most students are required to stay on campus their first year though so maybe the older kids are more likely to just want a place all year and not move back home for the summer.

Anyone ever try to develop a "dorm" type building for college students?

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