| A confluence of trends in higher education are making | | | | of the climate. Second, while you may have a paper |
| student housing a potentially lucrative environment to | | | | assessment of the demand for housing at a school, if |
| park your real estate investment. While it's potentially | | | | that demand has already been met, then buying more |
| lucrative, it has its own unique mix of circumstances | | | | rental property in a crowded space isn't terribly wise; |
| and setbacks, and you should be aware of them, and | | | | take some time to do some scouting around. Even |
| take measured steps into this market before sinking a | | | | more so, take the time to park your car on campus |
| lot of funds into it. | | | | and do some scouting around on foot, and on the local |
| First, the positives: Across the country, university | | | | bus system, to figure out where the places students |
| enrollments are increasing, and increasing fast. The | | | | hang out are, and where conveniently located housing |
| children of the baby boomers, the so-called "echo | | | | "should be". This will give you a good feel for what to |
| boomer" or "millennial" generation. This is a generation | | | | look for in the local market. |
| that already represents one third of the US population, | | | | Students want something within walking distance of |
| and spends over 170 billion per year of their own and | | | | campus. Other features that are considered essential |
| their parent's money, and they're just cresting on their | | | | are a place to park their car; covered parking is prized, |
| way through the demographic surge going to college. In | | | | especially on campuses in the Midwest and Northeast. |
| general, an echo boomer is a child born between 1982 | | | | Being able to get Internet access is important; talk to |
| and 1996; we're seeing the first wave of them head | | | | the local telco or cable provider to make sure that this |
| through school now. | | | | can be added in. |
| While enrollments are up, a lot of state colleges are | | | | If you went to school in the 80s or 90s, you may not |
| dealing with tighter budgets, and a greater demand in | | | | have much of an appreciation for what a modern |
| their facilities and spaces. With the growing demand | | | | college student expects out of off campus housing. |
| for on campus facilities for activities and teaching | | | | Newer construction is better than older, amenities like |
| spaces, they're knocking down the old dormitories, | | | | an exercise room, a pool or a sauna are considered |
| while enrollments are rising. For schools without | | | | selling points, and nearly anything you'd put into a high |
| enrollment caps, the campuses are waiting for the | | | | end home can be used as a market differentiator. |
| private sector to pick up the housing slack, and it's | | | | Indeed, if you're doing the "buy your child a condo" |
| happening pretty quickly. | | | | route, you may discover you're buying them a nicer |
| >From the perspective of a real estate investor, | | | | home than you're living in, which can cause qualms of |
| there's a lot to commend this as an investment | | | | panic, particularly if you remember your own student |
| opportunity, even on the small scale, just buying a | | | | apartment days of beer cans, empty pizza boxes and |
| condominium for your college age student to sell when | | | | lounging on couches salvaged from dumpsters. |
| they graduate. First, housing demand in college towns | | | | Today's undergrads don't expect to live in bohemian |
| is inflexible. It doesn't wax and wane with the job | | | | squalor while they get an education; the flip side of this |
| market, local industries, or nearly anything else. Second, | | | | is that someone has to pay for it, and that someone |
| it's a market where rent increases are expected | | | | will be you, in the form of cleaning fees after they |
| nearly annually, so you can keep a solid cash flow | | | | move out, higher insurance rates, and generally more |
| going. Third, with a bit of scouting around, you can find | | | | expensive setups to begin with. |
| the markets that give a near constant occupancy rate. | | | | Because this market is so specialized, bring in a |
| That scouting is called searching out the "bed to | | | | professional to examine it with you. Start small, with a |
| student" ratio. By looking at the materials published by | | | | couple of condominiums, before trying to convert an |
| the university and its registrar's office, you can | | | | old home into flats, or demolishing an older home to |
| determine the number of dorm room beds the | | | | build an apartment building. If you're buying a property in |
| university has, and the number of enrolled | | | | another state, by all means hire a local management |
| undergraduate students. Find out how what | | | | firm that has experience with renting to students at the |
| percentage of students have beds waiting for them | | | | campus you're supporting. If you're buying an existing |
| on campus - if the percentage is 40% or lower, you've | | | | rental property, examine all the tax records, and hire |
| got a market that's got solid demand campus student | | | | someone to go through the facility with a camera |
| housing. Some campuses, this percentage can get into | | | | taking pictures of everything - this will give you a good |
| single digits. | | | | visual record of the state of the carpets, walls, paint |
| Now, just because there's a solid demand doesn't | | | | jobs, etc. |
| mean it's a prime investment opportunity. Look at | | | | Finally, send a survey, after each semester, to your |
| campuses that are actively increasing their enrollment, | | | | residents, and find out what they'd like improved in the |
| like the ones in the southwest and southeast; a lot of | | | | building. Student housing is competitive enough that |
| students are going to school in the Sun Belt because | | | | being a "passive landlord" won't cut it at all. |