Student Housing: What Investors Should Know About Pros, Cons & Profitability


Student housing can be one of the most profitable niches of buy and hold real estate around. In fact, it’s how my father got started in real estate. Back in 1989, he bought his first house near the University of Oregon and just kept going from there.

Now, what I mean by student housing is houses and apartments nearby a university that are rented primarily to its students. They come with a few major advantages and, of course, a few disadvantages as well.

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Advantage 1: Higher Rents

In the right market, the same home can rent for substantially more to college students than it can to a family or other individuals. This is because 1) college students place a high premium on being near their university, whereas families are generally less specific about location, and 2) student housing is usually based off rent/bedroom and it’s often not that hard to add bedrooms.

So for example, we have a six bedroom house that rents for $695/bedroom. Or in other words, we are renting a house for $4,170/month! Obscene? Perhaps a little, but that’s what the market will bear. That’s a rather extreme case. But needless to say, families won’t pay nearly that much for the same home.

Advantage 2: Guaranteed Rents (Almost)

Our economic occupancy is extremely high on student rentals, about 99 percent. First, we have a built-in tenant base, which makes marketing easier. Then to help these students pay their rent, there are student loans. But the main reason economic occupancy is so high is that we require a co-signer for each student, and so we have their parents to back the lease. It rarely comes to that, but it makes it almost unheard of for us to lose out on rent for one of our college properties.

Related: Student Housing: A Case for Adding Condominiums to Your Portfolio

Disadvantage 1: Annual Turnover

Unfortunately with students, they aren’t going to stay for the long term. Sometimes you can get two or maybe even three years out of a tenant. But usually you will need to turn over the property each year.

Disadvantage 2: College Students Are College Students

You won’t believe this, but college students can actually be pretty destructive to a house or apartment. One would think that frat boy antics wouldn’t cause any serious damage, but you would be wrong. Beer pong may not cause much damage, but those weekend ragers can do a number on just about any rental property.

What to Look For

Now, in my opinion, the advantages outweigh the disadvantages when you can find the right market. Unfortunately, student rentals got “discovered” a few years ago, and in many college towns, there has been a lot of overbuilding. Around the University of Oregon, this has certainly been the case, with multiple, large developments being finished in the last few years. It’s also been a trend nationwide.

If you intend to go into student housing, the most important thing to look for is that the market isn’t oversaturated. Ask around and try to get an idea of vacancy rates. Also look at home and apartment prices. In some markets, they’ve been bid up so high that the advantages of higher rents don’t help.

The other major thing to look for is what kind of college it is. Many smaller schools or community colleges are “commuter colleges,” where there really isn’t a group of homes and apartments that could be referred to as student housing. Yes, students still live there, but there’s no real premium for it.

In other markets, there will be student housing with a premium, but you need to look very carefully to see how far this area goes. Sometimes students will live very far off campus in order to pay less rent. The way you should look at these situations is that this is housing that students live in, not student housing. Student housing is housing that students will pay a premium for because it’s close to the college itself.

There may be several zones, for lack of a better word, around each campus. So for example, Zone 1 is very close to the campus and students pay a large premium. Zone 2 is approximately five to fifteen blocks from campus on the west and north side only, and students will pay a decent premium. Beyond that is hit or miss.

Make sure to do your research ahead of time. It’s critical not to buy a house or apartment with the plan to make it student housing, when in fact it’s too far away or the market is oversaturated. I’ve seen this happen, and it doesn’t turn out well.

Tips on Managing Student Rentals

Remember, with student rentals, you are renting these houses and apartments out by the bedroom. That means that whatever you can do to add bedrooms (within reason) is something you should do. My dad has made a living off of doing things like buying a 3-bed home and turning it into a 5-bed house with a few creative room additions.

This does two things. First, with student rentals, more bedrooms equals more rent. With homes for families, other than the difference between a 2-bed and a 3-bed, there isn’t a huge advantage to adding a bedroom unless you’re also adding square footage. This is not so with student housing. A 3-bed house that’s 1500 sq. ft. may rent for $695/room (depending on the market). That same house made into a 5-bedroom home may rent for $595/room. That’s a huge value add!

Second, these students are young, not related and have no parents to tell them to pick up after themselves. Usually they will keep their bedrooms in decent shape. But the common areas will be subject to the tragedy of the commons and get more or less destroyed. Furthermore, large common areas are an invitation for raging parties, which college students have been known to throw. Anything you can do to convince them to throw such parties in someone else’s house is a good idea, and smaller common areas will help with that.

Related: 5 Ways Landlords Can Achieve Better Tenant Stability


It’s important to systematize your turnover as much as possible. The one nice part about annual turnover is that you know when it’s coming. You should have a date set to request a renewal that gives you plenty of time to find a new tenant if they say no. Also, you want to start looking before students go home for the summer. Of course, every market and college is different, but most students want to arrange their housing for the next year before they’re done with the current year of school. So get on the marketing early.

Before a tenant moves out, line up your turnover staff or contractors to start as soon as the tenant leaves to shorten the time between vacancies. And unless the market doesn’t allow for it, demand that students sign a year lease and rent the property in the summer, as it’s much harder to rent a property for just the summer and you don’t want to suffer three months of vacancy.

Student housing can be very profitable when done in the right way and in the right market. But just as with any niche, you need to understand its potential pitfalls before getting in.

Would you add student housing to your investment portfolio? Why or why not?

Let me know with a comment!

About Author

Andrew Syrios

Andrew Syrios is a real estate investor in Kansas City and a partner in Stewardship Properties along with his brother and father. Their company owns just over 500 units in four states.


  1. carlos fernandez

    Why is just the North and the West side of a campus at a premium and not the East and South.? Gotta say, that’s not been my experience.

    It’s good to network with graduate programs. Grad students stay much longer in an apartment. We stayed in one apartment for 3 years for our masters, and 7 yrs in the next one for our PhD’s. Grad students also are a bit more involved in the community and are more likely to have non-student established contacts. The duplex we rented during our PhD’s has had all but 1 month of occupancy total since summer of 2001 b/c ours friends knew about the duplex from the get-go and still live there. You read that right: 30 days over 14 years, just a hair over 1 day per year per unit. 5 tenants for 2 apartments in 14 years. Try and beat that!

  2. Katie Rogers

    If I had student housing, I would put all the students on a month to month lease. The first rage that happened on my property, and they are out. There are plenty of good studious kids who would appreciate a nice quiet house (even if there is nothing they can do about the neighborhood) with reasonable, as opposed to premium rent.

    • Andrew Syrios

      That’s not a bad idea and we’ve considered that before but the big thing to note is that it’s much harder to rent student housing (especially bigger houses) in the middle of the school year. So 1) you don’t want students up an leaving on their own and 2) While I do think you should come down hard on students who throw ragers. But sometimes a smaller party gets a little out of hand. I probably wouldn’t have a one and done policy. Maybe a two strikes and your out.

      • Katie Rogers

        If they have a ping pong table set up, and a whole bunch of red disposable cups, they are intending ahead of time to for their small party to get out of hand. The word “party” has changed meaning over the years, so that now it most definitely means an undesirable event. These days if they do not mean that kind of party, they choose another word to describe their event, like bar-be-que.

        • Andrew Syrios

          I agree that parties are undesirable, but large houses can be hard to re-rent after the school year has begun. So while I understand a one and done policy, we are personally a little more forgiving.

  3. Andy Gross

    My family has been doing this with mixed results. The town we are in basically colluded with the college and private developers to build multiple high-rises, and then steer students towards those rentals. Also, turnover can be really expensive. It all tracks back to to the fact that a lot of these 19 year olds have never lived on their own before. Sometimes, they just ignore critical maintenance tasks that would be no problem for a landlord to fix early, but become major repairs if left for a few months.

    • Katie Rogers

      My town is a university town and the university has begun providing more housing by either building or buying units when they come on the market. Landlords brought it on themselves here by taking advantage of the 1% vacancy rate to offer crummy rentals at exorbitant prices. After many vain attempts over many years to light a fire under the city council to enforce their own ordinances, the university took matters into its own hands. If anyone was hoping landlords would see the light regarding their practices, you would be wrong. they are just whining about it, and complaining that tenants feel entitled and want something for nothing. Meanwhile tenants feel that it is the landlords with the entitlement mentality. I have saying for years that landlords who operate by the Golden Rule create win-win situations for all concerned.

    • Katie Rogers

      Also one reason tenants do not say anything early is because so many landlords have redefined a quiet tenant as someone who does not bother them, as opposed to someone who keeps the noise down. Too many landlords classify “notifiers” as “complainers.”

  4. Adam Christopher

    I think I saw your dad on a youtube video a few years ago. I remember he started at the University of Oregon and then the kids started something in Kansas City.

    I have 2 college rentals and I love them. I am a college prof and I have spent most of my adult life in college towns. I decided to apply that knowledge for some additional income. At a theoretical level, there are many misconceptions about college kids, college towns and college parties. There are many people that are fearful of the market. That makes it easier for anyone else willing to take the risk.

    I thought your article was well written and accurate. My vacancy rate over the past 8 years has been 0%. Students typically sign leases in March that start in August.

    College students typically have parents that are high income and parents are usually the one’s paying.

    I don’t want to give away all of my secrets, but in a college town with high demand for housing, there tends to be a lot of properties that are not that great. Maybe a little dirty, outdated or whatever. If you put in a little bit of effort to make it look better than your competition some corporate parent is going to give you more money for their kid to live there.

    On some of my rental applications, some kids have $40,000 luxury cars and SUV’s.

  5. Joseph Freni

    I think an important detail missing here is this: (unless I missed it)
    Each town as a maximum occupancy per unit. At least in MA they do. So when I have to rent out a 5 bed to students, one town has max 3 people unrelated. Another town has 4. So a buyer needs to be aware of each towns policies. Of course, one could just have the lease written up to 3 people and they can sublet the other bedrooms. But you still need to be very careful. I love the student market. Zero vacancies! You just need to make sure you’re checking up on things often. It’s definitely worth the extra headache. The demand is so high where I am that I can really pick and choose the right group of students. My advice is never to rent out to a fraternity. Try and stay away from sports teams. I had a few players from a lacrosse team in an apartment and they partied a lot. Try and find the “geeky” ones, who are serious about their studies. Also, foreign students I’ve had really good luck with. Great students and tenants. Give them a try.

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