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<\/p>\nReal estate is a reliable way to make extra income and earn a return on your initial investment, but your choice in neighborhoods will have a massive impact on your success. Different cities and regions offer different perks for your investment, such as more attractiveness to incoming tenants and a greater potential for appreciation, but you\u2019ll need to consider the advantages and disadvantages carefully before you make a purchasing decision.<\/p>\n
One of the most interesting opportunities for real estate investment is in apartments or housing near college campuses. Near-college real estate can be a potentially lucrative investment\u2014so long as you know what you\u2019re getting into.<\/p>\n
Using a location-specific search site (such as Gator Rentals for Gainesville or Smart City Living for Dallas or Austin) can help you get a feel for the pricing and accommodations of your specific area. But the advantages and disadvantages of near-college real estate are somewhat universal.<\/p>\n
These are some of the best benefits that near-college real estate offers.<\/p>\n
Colleges are full of young people and tend to be highly populated. This energetic young crowd often attracts a number of amenities and accommodations, including restaurants, gyms, stores, entertainment, and even businesses.<\/p>\n
These features instantly make your near-campus housing even more attractive\u2014regardless of whether the tenants will be students attending the university. They also make your investment more secure since they\u2019ll offer more opportunities for the tenants opting to move in.<\/p>\n
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Related: <\/strong><\/em>Student Housing: What Investors Should Know About Pros, Cons & Profitability<\/a><\/em><\/p>\n Because universities generally attract thousands of new students every year, your tenant pool is going to be quite large. These students often temporarily inflate the existing population of the city, potentially doubling or even tripling the sheer number of potential renters you could accommodate.<\/p>\n According to Investopedia, rent prices in areas near universities tend to be stable, with an inclination to grow, so long as the university remains open and thriving. [1] You won\u2019t have to worry about much volatility since the desire for housing will depend strongly on the university\u2019s staying in business.<\/p>\n Universities don\u2019t often fluctuate in and out of existence, so you can rest assured you\u2019ll be able to charge a consistent price\u2014and hopefully become cash flow positive, even with a significant investment.<\/p>\n For the most part, you won\u2019t face extended periods of vacancy with your property because you\u2019ll see a relatively constant stream of new people attending school each year. A new wave of college freshmen will trickle in annually and may even join mid-semester, so you\u2019ll never be far from a fresh influx of potential renters.<\/p>\n Less vacancy time means you\u2019ll collect rent more consistently, and you\u2019ll ultimately be more profitable.<\/p>\n Though not a rule set in stone, the value of property in college towns tends to appreciate strongly. [2] Over time, as universities become more entrenched in the local economy, more businesses will spring up, more students will be attracted to the city, and more people will stick around after graduating to help the city grow even further.<\/p>\n It\u2019s a self-sustaining economic cycle that helps the area to improve over time, adding value to your property after even a few years.<\/p>\n However, there are a handful of downsides to investing in near-college real estate.<\/p>\n Some student tenants will want to remain in the area all year long, but most of them will return \u201chome\u201d during summer or when classes aren\u2019t in session. That means you\u2019ll likely see higher rates of tenant turnover, even if your total vacancy time is lower than usual.<\/p>\n Related:<\/strong> How I Used Real Estate to Pay for My Newborn Daughter\u2019s College Education<\/a><\/em><\/p>\n During summer months and other low periods of attendance, you\u2019re going to see low periods of tenant interest. That means you\u2019ll experience significant volatility in your incoming revenue, so make sure you can tolerate it in your monthly budget.<\/p>\n Stereotypes aside, college students tend to be energetic, have lots of free time, and enjoy gathering for recreational activities. This makes your property vulnerable to damage resulting from said activities. Requesting a higher security deposit may protect you against this potential disadvantage.<\/p>\n Near-college real estate offers many perks, but it isn\u2019t a perfect location\u2014there\u2019s no such thing. [3] As long as you\u2019re aware of the potential disadvantages and can compensate for them with your choice in property, purchase price, rent prices, and ongoing management, you can likely find a highly profitable deal in your chosen area.<\/p>\n Keep your eyes peeled for a good deal, and remember that it takes patience and timing to build wealth through real estate\u2014no matter what kinds of properties you choose.<\/p>\n Resources:\u00a0<\/strong><\/p>\n [1] http:\/\/www.investopedia.com\/articles\/mortgages-real-estate\/08\/real-estate-speculation.asp<\/a><\/p>\n [2] http:\/\/thecollegeinvestor.com\/7789\/invest-real-estate-college-towns\/<\/a><\/p>\n2. Large Pool of Prospective Tenants<\/h3>\n
3. Climbing, Stable Rent Prices<\/h3>\n
4. Less Vacancy Time<\/h3>\n
5. Value Appreciation<\/h3>\n
Disadvantages of Near-College Real Estate<\/h2>\n
1. Tenant Turnover<\/h3>\n
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<\/p>\n2. Off-Season Valleys<\/h3>\n
3. Potential for Damage<\/h3>\n
The Bottom Line<\/h2>\n
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