The Pros and Cons of Purchasing an Investment Property in a College Town
A college town can be a great place to purchase an investment property. There are numerous positive attributes to living in a college town that can make owning a property there a profitable endeavor. But, as with everything, there are pros and cons.
Lots of potential tenants: A college town has a large population of renters. Each semester new students are arriving and need to find a place to call home. You should have no problem keeping your property continuously rented.
Stable rent: Since the demand for rentals is so high in a college town, it helps to keep rental prices in the area strong, even when other parts of the housing market aren’t doing so well. Also, consider that it is often the parents of students, or the university itself that pay for off campus housing, so you may be able to charge higher rental prices.
Fewer vacancies: Again, the high demand for rentals in a college town pays off. There are always new students and faculty members looking for places to live and fewer vacancies mean more competition and ultimately may allow you to get higher rental prices.
The area sells itself: You don’t have to spend any time “selling” the area. It sells itself with the many attractive amenities that draw people to college towns.
Tenant turnover: With a large population of renters, comes frequent turnover. Most tenants in a college town will be short term. They will live there until they finish school or get a new job and then they move on. Most of these tenants will not want to sign long leases. You must be prepared to accept a one year lease and understand that turnover will happen often.
Difficulty in finding tenants during “off season”: Fewer students attend college during the summer, so you may find yourself with a vacancy during the summer months. One way to avoid that is to have tenants sign a 12-month lease verses a 9 month (school year) or month to month lease.
Excessive Wear & Tear: College living is hard on property. Young adult students don’t always have a lot of respect for their living space. Immaturity, alcohol use and parents footing the bill can all contribute to this lack of concern for your property. Property damage is common and repairs often exceed the amount collected in a security deposit. This is something to consider when renting to college students.
Time and energy: This is not a passive investment. You will need to be a hands-on property owner. Between the turnover, potential property damage and other issues that might come up (tenants being too loud, renters breaking leases), you will need to be actively involved in the rental process at all times. If you are not up to that task, owning an investment property in a college town may not be for you.
Desi brings with her a keen eye for the details of buying or selling a New River Valley home and seemingly boundless determination and energy, which is why her clients benefit from her unique brand of real estate service. Rooted in Tradition, Focused on the Future – Desi Sowers will help make the most of your New River Valley real estate experience. Give her a call today, 540-320-1328, and discover the difference she can make during your family's move.