Curious to see what other BP members are seeing who are active in college rental markets around the country. Here are some of the metrics from Champaign-Urbana (Home of the University of Illinois).
New multifamily units in Champaign (citywide) from 2005-2014:
2005: 588 | 2006: 272
2007: 591 | 2008: 245
2009: 80 | 2010: 279
2011: 292 | 2012: 226
2013: 288 | 2014: 818 (That's an increase of 284% of 2014 numbers)
Source: T.J. Blakeman, based on city of Champaign data
University (UIUC) Enrollment 2005-2014 Total (Grad/Undergrad):
2005: 40510 | 2006: 41180
2007: 40923 | 2008: 41495
2009: 41918 | 2010: 41949
2011: 42606 | 2012: 42883
2013: 43398 | 2014: 43583
Source: UIUC Division of Management Information
Overall the enrollment is creeping up and I would expect this to continue or even accelerate a bit over the next 5 years to help offset the decrease in funding from the state. My take is to not try to compete with the new/high-end rentals which are renting from $650 -$1400 per bedroom. Although I would love to get a property which brought in those type of numbers per bedroom the competition is going to get pretty intense which the increase of units over the past couple years. Grad students look to be the bright spot in the coming years, with a good number of them living off of their Research Assistantship or Fellowship which is somewhere around $25,000/year. You can see how most of Grad students are not going to be looking for the $650-$1400 because they simply can't afford the rent.
*Note: UIUC has the highest percentage of international students compared to any other public university. This is where a good number of the students come from who could afford $1400/bedroom/month.
What are others seeing out in the student housing space? Similar trends? What does the future hold, a bunch of properties going cheap when the owners can't fill the units and go belly-up?
I have been thinking that way about ChamBana for some time. I just don't see the market continuing in this way. I am almost to the point of not even looking in that area for any rentals because of the market being high for just about everything. I am finding much better deals elsewhere that might actually cash flow ! I believe it is going to be that way for some time though.
Hey @Jeff Cooley
Yeah, there has been a solid run in terms of building over the past couple years around the campus. With that said, there is still opportunities if you can pick up a property close to the university where the numbers makes sense by renting at $400-$500 per bedroom. Most of the new developments are not serving this need and their are plenty of grad students who are living off their RA or TA stipend and don't have the money for the new properties but are great tenants. These type of properties come on the MLS a couple times per year and most transactions are done off market so you either need to have a strong network in the area or some marketing lines in the water.
Best of Luck,
We are having a similar trend of high end apartments close to campus taking over the student market. They started cheaper ($450 a month 3 years ago), but moved up to $550 last year, and now I believe starting price is $700-750 per bedroom this year. These apartments include gaming rooms, workout rooms, 50+ person movie theater, etc. It seems hard to compete with and I know people are moving away from the student rentals around here because of these apartments.