Why I Choose to Invest in College Rentals

If you've spent any amount of time reading the forums or listening to the podcast, you probably realize real estate is a broad term. Within real estate has niches inside of niches. If you're willing to send out a mailer, be a wholesaler, better yet, a wholetailer.... I really wanted that to rhyme. Invest in retirement homes, student housing, SFH's, condos, invest in notes, syndicate, passively invest with cash, flip, dive, do a whirly bird.... you get it, there's 100 vehicles within real estate to help you reach your goals. I've chosen college rentals... and here are 3 reasons why. 

1. Cashflow

You have students who are either getting a government loan to pay rent or their parents. Those are pretty reliable sources for income. It's also a pretty safe bet students in college aren't trying to get evicted... so they pay. Better yet, get the parent's to be Guarantors of the Lease, because you know they won't allow for an eviction. You can also get a premium on your rents. Within a university, there is a great diversity in wealth, housing choice, as well as stage in life. You have undergrads, graduate students, faculty, administration, etc. My particular university is a major research university, has over 50,000 students, is the largest employer in the city, and houses most of the major hospitals. There's a tremendous variance in what those different groups would like to/can afford to rent. Some are looking for a barebones house as cheaply as they can get it. Others, are willing to pay a premium for granite, stainless, driveway, etc. I like the latter(value add opportunity).... because you can get a substantial amount more in rent. (Example- I bought by first duplex last year. The 1b1b rented for 700/month. I put $12k into new kitchen design, refinished hardwoods, added stainless appliances, and made it AIRBNB ready. However, I decided to put it on zillow for shits and gigs, had 3 young couples willing to pay me $1,100/month. I'll have made my money back on that investment in less than 4 years )

2. Low to no vacancy

I've talked to multiple investors investing in my area who say they've not had a vacancy in 15 years. Kids always need a place to stay... and if you're in close proximity to school, and keep your house in good condition, it will be rented. Whether you're in a rural school with limited housing(talk about high demand) or a big city, homes near a college will always be in demand. The ability to sign 1 year leases is quite appealing. I happen to invest in a commuter school.... I've yet to have issues getting full year leases.

3. Path of Appreciation

If you're investing near a major university, typically, you'll be investing near a major employer, near a massive consumer base that attracts retail development. You'll be near hospitals, research centers, and other key institutions vital to the community. More than likely, you'll be near a sporting venue, bars, and even a starbucks! These are like embers.... that eventually, if the university is doing well, will turn into flames.... assuming of course they haven't already. Also, major universities don't go out of business very often. When taking into consideration the strong demographics, optimism for continuing development(s), nearby amenities, workforce, etc.... it's hard to imagine these areas not rising in value.