The Pros and Cons of Investing in Real Estate Near a College Campus
College campuses are attractive places for people considering investing in real estate. Since there are new students who need housing each year, investing in property near campuses tends to be less volatile than investing in other areas. However, there are also possible downsides to investing in off-campus housing, so it’s a good idea to explore the pros and cons before making a decision.
The Pros of Investing in Off-Campus Housing
Because many students, staff and faculty need housing near their college campus, investing in these areas can offer stable opportunities for some extra profit. Most colleges cannot provide on-campus housing to all of their students, so there is usually demand for off-campus housing. As long as the college itself continually draws students in, each year will bring a ready pool of tenants. Because of this, real estate near campuses tends to be less risky than properties elsewhere.
Students also like to have nearby places to eat, shop and spend their free time. The good thing is, young people are a popular target demographic for businesses, attracting all sorts of amenities that may raise the property value of nearby real estate. This means rent prices tend to appreciate after a few years as the local economy expands with the rapid population influx.
Sounds like a win-win situation for everyone, right? Even so, there are a few points of caution you should consider before making any decisions.
What to Watch Out For
It’s important to consider the nature of the college’s schedule when looking at off-campus housing. For instance, even though the flow of prospective tenants will usually be steady, the unavoidable downside is the high turnover rate as older students graduate. Summer and winter breaks will see some turnover too, as many students like to go back and live with their parents or families when school is not in session.
Don’t forget that most of your potential tenants – being students – will be renting for the first time. Students are young and full of energy, and infamous for partying. This is great for stimulating the economy, but keep in mind that this demographic has a higher chance of causing property damage. The toll can always be mitigated by planning for a security deposit.
As with any real estate investment, there will always be a few negatives that go along with the positives. Even so, property near college campuses can offer great opportunities for those looking to make some profit. They can be an especially great idea if you have a child who you might like one day to send to college – these investments can offer the profit that can eventually pay his or her tuition.