How far is "too far" from campus for a student rental property?

Question

Hello,

How far away from campus is the maximum distance you would want to invest in a student rental property? Would a 10-15 minute drive to campus be pushing it for investing in a student rental property? Would the rent decrease as you move further away from campus? I'd appreciate any input. Thank you!

Gabriel A Pena · Answer

I'm a UF student now, and I can say proximity to Campus is especially important. A lack of campus parking options discourages students from taking long commutes to classes, so I've seen most students be .5 miles away from campus. There's a reason Gainesville is considered the "Scooter Capital of the World" it's because students leave their cars behind and buy something that allows them to park on campus. People might overlook this, but it is a huge factor that affects Rental Property values

Jenn Barona · Answer

I’m an agent/investor here in Gainesville, Florida, home of the University of Florida. I think this questions answer is going to be very based on each campus specifically. When it comes to undergraduate students most of them want to be as close as they can to the school. Walking distance is definitely great but as long as the city has good bus routes like here in Gainesville the students are not opposed to living farther out, especially since the prices get much cheaper.

On the other hand I have found that a lot of graduate students want to live fairly close but definitely not walking distance. They prefer to not live in a “college area” as they would rather pay extra to have peace and quiet and not have to worry about parties and just the loud atmosphere overall. They do not mind driving into campus.

Matt Leber · Answer

@Kyle Marsh at University of Florida in Gainesville FL, the premium student rent amounts seemed to drop off about 8 blocks from campus hub. Students still live beyond that zone (I did bc it was cheaper). My rent was about $350/bedroom in a 5 bedroom house versus my sister in law who lived 2 blocks from campus and her rent was $800/bedroom plus the landlord was charging them monthly for parking spots. Crazy!!!

Matt George · Answer

and don't be afraid to pay extra for a student rental that is in a prime location for students. With an A+ location (like right across from campus), you will always have it rented with zero effort (it can even be a feeding frenzy with multiple groups interested) and for the highest, almost absurd rent amount. The extra cost of the same house that is right on top of campus will be worth it. This is market dependent but oftentimes it is parents that pay and if their kid says this is where we HAVE to live, parents will pay it and not care if the surrounding market is cheaper.

Will Gaston · Answer

@Kyle Marsh My experience is to buy as close as possible to something fun (i.e. bars, football stadium, etc). Despite what parents say, 18-22 year olds mostly go to college to have fun.

Kids make their housing choice based on a lot of things but "how much fun will it be live here?" is the main internal question that they ask. When I buy another student rental I always ask myself "How much fun would it be to live here?"

Other experiences on here will differ but that is mine.

This thread may be of some help as well: Nearing 1,000 College Students: Here's What I've Learned

Jay Ingersoll · Answer

@Kyle Marsh if you are aiming for student rentals, I would say the premium rent comes in when they can walk to class. I personally don’t buy any property that is not walking distance.

Gaetano Ciambriello · Answer

I agree with the comments above. Each market will be different. Students want to live near the destination points. In my market, living near the beach is preferred. In other markets, students may want to live near the bars and restaurants.

Nick C. · Answer

I try to pick off the highest bedroom count houses, or houses I can add bedrooms to within a block or two of the school. I also pay a great deal of attention to the zoning around the college, there are some blocks around the college with beneficial zoning in my area that larger developers (including the school) really want, these are the primo properties I aim for, though I will go up to the neighborhood boundary streets which are about ten blocks out on one side. College students in my area tend to walk and bike, even though a lot of them have cars.

Natalie Schanne · Answer

@Kyle Marsh - definitely don’t underwrite for a room by room student rental if you’re not within walking distance of campus (or a student housing apartment community with free bus shuttle to campus). I might get $650/room 2 blocks from edge of campus whereas my friend 8-10 blocks farther away may get $500/room. X 4 that ends up being $600/month or $7200/year in value differential. Given that almost all your profit comes at the top end (there’s a baseline cost for owning a property in terms of standard maintenance and property taxes), is the closer house $70,000+ more? Usually not.

You can underwrite for room by room professional housing if you’re within walking distance of restaurants and short driving distance to corporate offices. You don’t have to only rent to students. I’ve definitely seen single working professionals share homes, especially if they can live for 50-70% of the cost of a single apartment and have all the same amenities (nice kitchen, laundry).

Landon Clipp · Answer

I have a student rental property that is 1 block away from official campus grounds. That allows them a 5-10 minute walk to pretty much anything of interest.

Whether or not a 10-15 minute drive is too far depends entirely on your market and whether your college is considered a "commuter's school." There is another community college nearby where everyone is expected to drive. It has huge parking lots. But the public school where I am investing near encourages public transportation, walking and biking. It's actually a huge pain to park your car anywhere nearby. If your school is more pedestrian oriented like my local public school is, a 10 minute drive is not something students would choose to do. Even a 5 minute drive really. If they can't walk/bike/public transport to class within 20 minutes or less, it's too far.

I was looking at multiple properties along one street recently and found that even on the same street, a house next to campus will go for about 10%-15% more than an equivalent house just a few blocks down the street. There is a sharp drop-off of the type of renter the farther you go from campus.

@Matt George is right that rent for student housing next to campus is ridiculously high. But that doesn't necessarily mean better performing properties, because increased rent means higher property taxes (higher assessed value) and also dramatically increased insurance rates. Students also cause more damage so you have to factor in more maintenance.

How far is "too far" from campus for a student rental property?

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