Housing College Kids Makes For Good Investments
Savvy real estate investors and even those looking to get into the real estate investing industry are always on the look out for good investment opportunities.
Keeping up with trends and statistics within the housing and property markets is the best way to succeed in real estate investing.
One trend that has been identified recently for real estate investors is providing housing for college students.
More and more people are going to attend college as the years go on, and some savvy investors have already identified this group as a very profitable investment opportunity.
Buying properties specifically designed to house college students opens the door for a lot of profits. Not only are you virtually guaranteed there will always be someone to rent out the property if it is near a major college or university, but your profits should continue to increase as rents rise.
A February 4, 2007 article by Lew Sichelman of The Los Angeles Times, “Number of college kids is rising: They have to live somewhere,” discusses how this type of real estate investing is relatively low-risk yet very profitable.
Research is pointing directly to what may be today's best real estate investment: student housing. “According to the National Center for Education Statistics, college enrollment will grow by 11% between 2003 and 2013. Higher education is less affected by economic trends.”
“Next, toss in the fact that rents for student-housing properties have been rising at a higher rate than at conventional apartments, according to the National Multi-Housing Council, and you have the makings for what savvy real estate investors call a ‘good niche opportunity.’”
If you think that this may be a viable real estate investment market for you, the best way to get started is to look into REITs.
“Private equity funds deal only with high-net-worth investors, but there are others ways to put your real estate dollars to work in student housing. The simplest is to invest in one of the three publicly traded real estate investment trusts (REITs) that specialize in student housing: American Campus Communities, Education Realty Trust and GMH Communities Trust.” “REITs are companies that own and often operate income-producing properties. To be a REIT, a company must distribute at least 90% of its taxable income to shareholders in the form of annual dividends. Because investors own stock rather than property, they can jump in and out of the market at will.”
REITs do all of the work for you. You do not have to deal with a property management company, unlawful tenants or anything else like that.
If you are the type of real estate investor that likes to do things hands-on, there are other options to getting into this niche as well.
“But if you are a hands-on type of investor who wants to roll up your sleeves and get the best bang for your buck, you can buy a small apartment building with a handful of units, or just a single-family house. Realize, though, that renting to college kids is different from renting to families.”
College kids tend to use and abuse their dwellings a little bit more than the average adult, so be sure that you are ready for a little out of the ordinary wear and tear on your property. If you want to manage the property and your tenants by yourself, it is virtually mandatory that you live in close proximity to your rental unit.
Also research the college and the area thoroughly before making any purchases.
“Next, stay away from private universities, which often place strict controls on off-campus housing. Also beware of city-based commuter schools where the majority of students live at home and drive to class. Instead, look to public schools where budgets are tight and housing is in short supply.”
Following these tips should help you to have a successful and profitable real estate investment purchase.