Forbes recently published their list of the top metro areas for college investing. The idea behind the article and list is, instead of spending thousands of dollars on room and board for your student, buying a property might be a better investment. You can purchase a condo or house and rent it out to not only your child, but also to other students as well – of course, this would all be done in an effort to profit.
This is a fantastic idea, and I believe all parents with college students should consider this option. Others looking for investment properties should also consider purchasing college real estate. Be aware that there are both benefits and pitfalls to renting to students, and it is a good idea to know the law before getting yourself into these or any other properties.
Remember when you were 18-22 years old? I know I wasn’t the most responsible person in the world back then. I believe the hole patching tool of choice was Crest Toothpaste. I’d have to take a wild guess and say that students will typically cause a bit more damage then your average tenant, and turnover is pretty high as well. At the same time, if you just assume a higher turnover rate and have an airtight inspection process tied to your security deposit, these factors don’t look as scary. One of the best things about having a rental property in a college town is there typically is not a shortage of renters. Like any investment, you want to be sure that the numbers work out by conducting a proper property analysis.
Here are the Top 10 Metros for College Investing as determined by Forbes:
1. Los Angeles-Long Beach-Glendale, CA
2. Washington-Arlington-Alexandria, DC-VA-MD-WV
3. Santa Ana-Anaheim-Irvine, CA
4. Miami-Miami Beach-Kendall, FL
5. Riverside-San Bernardino-Ontario, CA
6. San Diego-Carlsbad-San Marcos, CA
7. Phoenix-Mesa-Scottdale, AZ
8. New York-White Plains-Wayne, NY-NJ
9. Baltimore-Towson, MD
10. Fort Lauderdale-Pompano Beach-Deerfield Beach, FL
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I’m currently a REALTOR in Naples, Florida and I’ve been preaching this for quite a while. Especially with 3 or 4 students sharing a home, it is so easy for them. If the students do not have the money to close, with four of them, a parent will usually step up and help. As long as the owner’s student has decent friends, it’s a fantastic way to start building equity.
Thanks for your thoughts, Chris. Without a doubt, I wish my folks would have bought an apartment back in the day when I was in school.