Investing in Student Housing - Pros and Cons

Pittsburgh, Pennsylvania
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Investing in Student Housing - Pros and Cons

Brad Diggans
Investor · 15136 · Member since 2021 · 10 posts · 1 vote

I am looking into purchasing 10 units in a small town university in PA.  The obvious pro is that income is higher than comparable residential as you can rent by the bed as opposed to by the unit making the 10 units rent to 28 Beds.  The units are fully booked through May 2022 at this point and are financially a great deal based on the numbers for the next year.

The main risk I am seeing is that the 5 year trends show that small town universities are shrinking in enrollment in general and there is a big move to online courses after Covid.

I am looking for input from any experienced investors in the student housing market that can provide any additional insights into my decision. 

Thanks in advanced for your input.

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  • Dave PoeppelmeierBusiness Member
    Realtor · Maumee, OH · Member since 2015 · 491 posts · 722 votes
    5y

    Hi Brad, you are on the right track. Yes, Student Housing is a great niche of RE, but there are risks. One of the biggest risks that I see is the smaller college with enrollment. If it's a smaller college in a bigger area where you could still rent the units normally, then as long as the regular rent rates would work OK you should be fine. If it's a college town where the college is the main economic driver, that's a big risk. 

    The other concern is renting by the bed. You need to make sure that it is OK to do that in the municipality you are in and they won't consider it a Halfway House or a Boarding House. Is that the culture of the market? All colleges and universities are different. I personally keep all students in a house/unit on one lease to make my life easier as well as having peep pressure to make sure everyone is paying their rent. The biggest thing to find out in any market is what does everyone else do. When is the rental season? What are comparable rents? Is the school friendly to off-campus housing or not? 

    Otherwise, I really enjoy Student Housing and it's a great area to be in, if you do it right. Good luck!

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