Are you getting ready to invest in multifamily properties for the first time and are considering investing in a multifamily student rental property versus a traditional rental?
The reality when it comes to student housing is that it is indeed a very smart multi-family real estate investment because student housing is always in demand especially when it’s located near a college or major university.
This article will break down the pros and cons of investing in student housing so that you know if this is the right decision for you to make or not.
What Are The Pros Of Student Rentals?
Huge Demand – Regardless of which state the property is located in it, as long as it’s located next to a college or a major university, there is always going to be a demand for that student rental each year.
The reason for the huge demand for student housing has to do with the increase in student enrollment across the United States. Over the last 10 years it continues to increase as more people from the Millennial Generation, and Gen Z, graduate high school and move on to college.
Sadly, with more people going to college every single year, the average college and major university in the United States has been unable to keep up with the demand for on-campus student housing.
This is why the average student starts searching for rentals that are close to campus as soon as they get accepted at a college or university.
Multi-family student housing is especially attractive because it’s highly likely that the average student who has enrolled in a university is more than likely to tell their friends about the property they are living in when one of the units is vacant. This will lower your advertising costs and make it easier for you to fill those vacancies when they occur.
Recession-Proof – Another great reason to invest in multi-family student housing is that it’s a recession-proof investment.
Yes, this term is thrown around a lot by investors but the reality is that there’s always going to be people who are going to college and will need a place to live so there really will never cease to be a demand for student housing regardless of how the economy is doing.
No Chance Of 100% Loss Of Income – Loss of income is something that multifamily investors have to face each time one of the units in their properties becomes vacant.
Thankfully, when you own a multi-family student housing property, you won’t have to worry about a loss of income because if one student moves out because they transfer to another college. There’s always going to be another student who will be eager to move into that vacant unit so that they can have a place to live, especially if it’s close to the college or university where they are attending.
Turnkey Investment – Student housing is also without a doubt a turnkey investment opportunity because, almost as soon as you purchase the multi-family student housing property, you can start renting it out to students were looking for a place to live.
International Students – Besides the high numbers of people from the Millennial Generation and Generation Z, that will be going to college in the 2020s, another great reason to invest in multi-family student housing is that there are also more International students who come to the United States for advanced degrees than ever before.
The average international student who comes to the U.S. for their advanced degree, and or a bachelor’s degree is typically from countries like India and China. What most people don’t know is that International Students also pay higher tuition than students who were born in the United States. This makes them a very lucrative base of renter’s that any landlord who owns student housing should be interested in renting to.
What Are The Cons Of Investing In Student Housing?
Possible High Wear And Tear – One of the biggest things that you should be aware of when investing in student housing is that it’s possible that renting to students could possibly mean a higher amount of wear and tear on your rental property than what you would have if you were to rent to non-students.
By high wear and tear, we mean that you may find that you’ll have to paint the units in your rental property more, replace flooring, doors, windows and in some cases, you may even have to hire a contractor to repair holes in walls.
One of the best ways that you can protect yourself when renting to students is to stipulate in your lease agreement that any repairs will be covered by their security deposit.
If the student is responsible for damages to rental property beyond normal wear and tear, the lease agreement must also state that they could face heavy financial penalties.
Unsupervised Kids Could Bring Risks – Yes, it’s true that when you’re renting to students you have to face the reality that you’re also renting to people who may be living unsupervised for the first time in their lives. You also have to face the fact that they may have roommates, regular parties, and disagreements or fights that you may have to break up.
One thing that can definitely save you a lot of time and money when you invest in student housing is hiring a property management company. A professional property management company will have a rock-solid lease agreement and measures in place to ensure that the students they rent to respect your rental property and follow all the rules of their lease agreement.
Students Might Not Take Maintenance Seriously – From changing the batteries in smoke detectors to light replacing bulbs, another reality that you should be prepared for when renting to students is that they may not treat maintenance tasks as seriously as non-student renters.
If you hire a property management company to professionally manage your property, they will also walk your tenants through all of their responsibilities, ensuring that should a maintenance issue arise, the student tenant will know to report maintenance issues immediately and not let small maintenance problems turn into potentially expensive repairs.
In this article, we’ve offered you a variety of reasons to consider investing in student housing and some reasons why you should not consider it. The goal of this article isn’t to dissuade you from student housing, it’s to offer you valuable information that will help you to see that student housing is indeed a smart investment opportunity.