5 States Where College Towns Are Starving for Rentals

Out of State Investing
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5 States Where College Towns Are Starving for Rentals

Cole Bossert
Real Estate Broker · Boone, NC · Member since 2024 · 82 posts · 55 votes

If you want reliable demand and less competition, college towns are a smart play — especially in states where enrollment is growing faster than housing supply.

Here are 5 states where student housing shortages = investor opportunity:

1. North Carolina

• College towns like Boone and Chapel Hill are underbuilt

• High out-of-state enrollment + limited development

• Landlord-friendly, with strong long-term growth

2. Georgia

• Schools like UGA drive big rental demand

• Lots of small towns with minimal rental stock

• Strong pre-leasing activity = low vacancy risk

3. Indiana

• Low home prices + steady student turnover

• Towns like Bloomington rely on private landlords

• Easy eviction process and solid cash flow

4. Alabama

• Student-heavy towns with aging housing stock

• High rent premiums near campus

• Low taxes and fast legal process for landlords

5. Colorado

• Schools like CSU and CU Boulder face housing caps

• Students and young pros compete for limited supply

• High rents support house hacking or co-living plays

Where else are college towns still flying under the radar?

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Denise Evans
JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes
1y

At least in Tuscaloosa, student housing brings higher rents. Yes, they are often rough on the property but regular inspection visits and immediate consequences keep that to a minimum. Also neglect-proof finishes like LVT flooring, quartz countertops, one-piece shower and/or bath enclosures and painted cabinets.  Plan on changing out HVAC filters yourself and doing pest control yourself. 

While they each pay rent by the bedroom, make sure the lease includes joint and several liability, which means everybody is liable for the whole property rent, not just their portion. If one student defaults, the others make that one pay or they ante up the difference.

Parents all guarantee the leases, so there is almost no risk of default.  Most landlords make some portion of the security deposit non-refundable as a turnover fee.  

If you are a good landlord, they will refer their friends and classmates to you and you'll never have any vacancies. A friend of mine specialized in student housing. He said their last memory of their landlord is the "lasting memory." He inspected monthly and stayed on top of them to fix minor things and clean things or pay to have it done, immediately. But, he always refunded the security deposit, in full, 5 days after lease end, unless they completely trashed the place. He charged market rents and always had a waiting list for his units.

Again, I speak only for Tuscaloosa, but historically student housing sold on lower capitalization rates than regular rentals. I'm making up these numbers, because this post will be online for a long time but cap rates will change, so don't takes these as current cap rates. A SFR in a family part of town might have monthly rent of $3,000 and an annual Net Operating Income (after expenses) of $27,000 and might sell on a 7-cap for $385,700 Student housing with the same numbers might sell on a 6-cap for $450,000.

The investment strategy is to buy cheaply on the fringes of the path of student housing growth, and then wait a year or two until the area turns to a student housing area.

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  • Denise Evans
    JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes
    1y

    I agree for Alabama. I'm in Tuscaloosa, home of the University of Alabama main campus. Student housing is priced by the bedroom. A 4BR/4BA house might rent for $4,000 per month but cost only $250,000 or less to purchase with operating expenses below 25%. All four students are responsible for ALL of the rent, and all of their parents guarantee 100% of the lease.

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  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    1y

    My dad has a bunch of rentals around the University of Oregon and while he still gets great rent out of those properties, it has been built up like crazy around the UO. It seems like that happened around lots of universities in the last decade or so. 

    Do you have any data on those markets showing they're underbuilt? I would definitely be interested to see it. 

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  • Ryan RomingerBusiness Member
    Real Estate Broker · Indianapolis, IN · Member since 2018 · 340 posts · 144 votes
    1y

    Love this breakdown—spot on with Indiana, especially Bloomington. I'd also add Muncie to the list. Ball State keeps demand steady, and there’s still a good amount of undervalued housing stock. Plus, smaller investor presence means less competition on deals. Curious if anyone's looked into towns like Terre Haute too—some overlooked gems there.

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    • Becky KlingeleBusiness Member
      Terre Haute, IN · Member since 2017 · 8 posts · 0 votes
      1y
      Quote from @Ryan Rominger:

      Love this breakdown—spot on with Indiana, especially Bloomington. I'd also add Muncie to the list. Ball State keeps demand steady, and there’s still a good amount of undervalued housing stock. Plus, smaller investor presence means less competition on deals. Curious if anyone's looked into towns like Terre Haute too—some overlooked gems there.


      Muncie and Terre Haute are very similar, although Ball State enrollment has increased while Indiana State University's decreased. However, Terre Haute has the #1 ranked engineering school in the country (Rose Hulman Institue of Technology) and there's strong demand for 3-4 bedroom houses on the east side.

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  • Dave PoeppelmeierBusiness Member
    Realtor · Maumee, OH · Member since 2015 · 491 posts · 722 votes
    1y

    I would add to this that college markets can be wildly different from one another. Here in Northwest Ohio, Bowling Green State University is a college town with very limited housing and very high demand, and getting into the market is an expensive (proportionally, this is Ohio after all) proposition. The University of Toledo is in central Toledo, and the Student Housing area per se is confined to 2 neighborhoods adjacent to campus. Anything past that, you could have Students rent but there's no premium on the rent for being walkable/bikeable to campus.

    Be sure do your homework on when the leasing periods are for each school, local regulations (some college embrace Student Housing, others fight it), etc. Despite some extra hoops and hand on needs, I enjoy being in this niche. 

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  • Frank Wei
    New to Real Estate · CA · Member since 2025 · 9 posts · 7 votes
    1y

    Hi all, stumbled upon this thread but found it pretty interesting. 

    Was curious if anybody on this forum has invested in both student housing and non-student housing and how they compare in terms of return and level of work. 

    Student housing seems like it would be great for cash flow as it's rented by room and it seems less likely that students would not pay their monthly payments but there would be new leases every year and potentially higher cost every time there is a new tenant? When I was a college student, I definitely did not have the maturity to care about keeping my apartment nice/clean/etc...

    Thanks,

    Frank

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  • Denise Evans
    JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes
    1y

    At least in Tuscaloosa, student housing brings higher rents. Yes, they are often rough on the property but regular inspection visits and immediate consequences keep that to a minimum. Also neglect-proof finishes like LVT flooring, quartz countertops, one-piece shower and/or bath enclosures and painted cabinets.  Plan on changing out HVAC filters yourself and doing pest control yourself. 

    While they each pay rent by the bedroom, make sure the lease includes joint and several liability, which means everybody is liable for the whole property rent, not just their portion. If one student defaults, the others make that one pay or they ante up the difference.

    Parents all guarantee the leases, so there is almost no risk of default.  Most landlords make some portion of the security deposit non-refundable as a turnover fee.  

    If you are a good landlord, they will refer their friends and classmates to you and you'll never have any vacancies. A friend of mine specialized in student housing. He said their last memory of their landlord is the "lasting memory." He inspected monthly and stayed on top of them to fix minor things and clean things or pay to have it done, immediately. But, he always refunded the security deposit, in full, 5 days after lease end, unless they completely trashed the place. He charged market rents and always had a waiting list for his units.

    Again, I speak only for Tuscaloosa, but historically student housing sold on lower capitalization rates than regular rentals. I'm making up these numbers, because this post will be online for a long time but cap rates will change, so don't takes these as current cap rates. A SFR in a family part of town might have monthly rent of $3,000 and an annual Net Operating Income (after expenses) of $27,000 and might sell on a 7-cap for $385,700 Student housing with the same numbers might sell on a 6-cap for $450,000.

    The investment strategy is to buy cheaply on the fringes of the path of student housing growth, and then wait a year or two until the area turns to a student housing area.

    3Reply
  • Jules Aton
    MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
    1y

    Any thoughts on the overall state of university trends in consideration of so much being virtual now? Will the majority continue to go away from home for the college experience? What about the funding concerns looming? 

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  • Gregory SchwartzBusiness Member
    Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
    1y

    Texas? Specifically, Texas A&M
    - One of, if not the, largest universities in the United States in a town of just over 200,000 people (Bryan / College Station TX).
    - A university that has grown 30% in the last 10 years. One of the fastest-growing universities 
    - Landlord-friendly laws
    - The 2nd fastest-growing state in the US 

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  • Denise Evans
    JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes
    1y

    @Jules Aton, I don't see virtual learning being a dramatic impact on student housing except for perhaps graduate students.  Most parents of college-bound students want them to have the "college experience" of a semi-safe environment away from home where they can learn to be independent.  Different considerations for graduate students, but I'd put them in the housing category of "young professionals."  In other words, no need to live close to campus and might even relocate to cities where they ultimately want to work. Or to vacation destinations they can enjoy before entering the workforce.

    1Reply
  • Tenzapa Wakombe
    Real Estate Agent · Nashville, TN · Member since 2025 · 126 posts · 62 votes
    1y

    Good list — all strong plays for sure. I’d also keep an eye on a few other spots flying under most people’s radar:

    • Tennessee — UT Knoxville is growing fast, and housing hasn’t kept up. Plus, Tennessee's landlord laws are very investor-friendly.

    • Arkansas — Fayetteville (University of Arkansas) has serious demand and very little quality rental supply.

    • Mississippi — Oxford (Ole Miss) is small but rents like a much bigger market during the school year.

    • Montana — Places like Bozeman (Montana State) are getting hammered by low inventory and rising enrollment, especially post-COVID migration patterns.

    Main thing: anywhere the school is growing faster than builders can keep up, you've got pricing power.

    Bonus tip: I’m looking extra close at second-tier colleges too — the ones that don't make national headlines but still pull 10k–20k students a year. Less competition, same fundamentals.

    2Reply
    • Andrew Van Dyke
      Member since 2025 · 2 posts · 0 votes
      1y
      Quote from @Tenzapa Wakombe:

      Good list — all strong plays for sure. I’d also keep an eye on a few other spots flying under most people’s radar:

      • Tennessee — UT Knoxville is growing fast, and housing hasn’t kept up. Plus, Tennessee's landlord laws are very investor-friendly.

      • Arkansas — Fayetteville (University of Arkansas) has serious demand and very little quality rental supply.

      • Mississippi — Oxford (Ole Miss) is small but rents like a much bigger market during the school year.

      • Montana — Places like Bozeman (Montana State) are getting hammered by low inventory and rising enrollment, especially post-COVID migration patterns.

      Main thing: anywhere the school is growing faster than builders can keep up, you've got pricing power.

      Bonus tip: I’m looking extra close at second-tier colleges too — the ones that don't make national headlines but still pull 10k–20k students a year. Less competition, same fundamentals.


       What are some second-tier colleges you're looking at?

      0Reply
  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    1y
    Quote from @Cole Bossert:

    If you want reliable demand and less competition, college towns are a smart play — especially in states where enrollment is growing faster than housing supply.

    Here are 5 states where student housing shortages = investor opportunity:

    1. North Carolina

    • College towns like Boone and Chapel Hill are underbuilt

    • High out-of-state enrollment + limited development

    • Landlord-friendly, with strong long-term growth

    2. Georgia

    • Schools like UGA drive big rental demand

    • Lots of small towns with minimal rental stock

    • Strong pre-leasing activity = low vacancy risk

    3. Indiana

    • Low home prices + steady student turnover

    • Towns like Bloomington rely on private landlords

    • Easy eviction process and solid cash flow

    4. Alabama

    • Student-heavy towns with aging housing stock

    • High rent premiums near campus

    • Low taxes and fast legal process for landlords

    5. Colorado

    • Schools like CSU and CU Boulder face housing caps

    • Students and young pros compete for limited supply

    • High rents support house hacking or co-living plays

    Where else are college towns still flying under the radar?


     I see you are servicing one of these towns. :-)

    0Reply
  • Alex Terry
    Member since 2025 · 2 posts · 0 votes
    1y
    Interesting thread.  For those who are renting in the student housing markets, how do you handle summer break?  Are students (and their parent guarantors) willing to sign 12-month leases, even though they might only be there for 10 months?  Or are you doing shorter lease periods, but charging enough to make the economics work?  Also, what rates are you seeing from property mgt companies?  Do they charge more to manage student rentals?
    0Reply
  • Peter Smith
    Rental Property Investor · Reading, PA · Member since 2019 · 13 posts · 2 votes
    1y

    @Alex Terry How summer breaks are handled typically depend on the market. If everyone is doing 12 month leases, you probably want to do 12 months as well. We prefer 10 month leases, which account for "rent loss" over the summer (i.e. 12 months rent in 10 months time). Summer turn is a tight stressful as is, so the more time our team has the better job we can do on preparing and updated units. We usually allow tenant who renew to live rent free (but pay utilities) over the summer. It is a marketing tool for us. For new or leaving residents we charge additional rent for any periods they remain over the summertime. 

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  • Matthew WeaverPro Member
    Investor · IN/OH/AZ · Member since 2020 · 19 posts · 12 votes
    1y

    For Bloomington, I offer my own experience.  Last year, we chased the property managers and landlords to rent an apartment.  This year they are chasing us.  The property manager for the unit we rent currently, told me that more units are available this year and they are working harder to rent their inventory out, and she manages a quality portfolio. 

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  • Lindsay DavisBusiness Member
    Real Estate Broker · Birmingham, AL · Member since 2019 · 327 posts · 203 votes
    1y

    To expand on what @Denise Evans is saying about buying in the path of progress: UA’s enrollment figures have increased by 22% over the last 5 years and doubled in the last 20 years.

    Unlike highly-selective private schools, public universities like UA tend to increase their student body populations over time, so demand is likely to grow for the foreseeable future. Not to mention, on-site administrative and teaching staff are also going to grow in proportion with the number of students enrolled as well. Those professionals, who may move to Tuscaloosa with their entire families, will also need housing in close proximity to campus.

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