The Pros and Cons of Purchasing Property in a College Town

College towns are full of bustle and hubbub as students come and go. They will live in a place for a few years before graduating and moving back home or to a new city. Turnover rates for rental units are extremely high, but so is demand. By examining the characteristics of property in a college town, you will be able to consider the pros and cons of purchasing such a piece of land. While there could be some potential drawbacks, overall, it can be a very safe place to invest in due to steady demand from students.

Turnover is high.

Having a high turnover is both a pro and a con. While it means that you will have to find new tenants almost every year, having a vacancy in between means you have a chance to assess the property after each batch of tenants is gone. Repairs can be made before they get progressively worse and you have a chance to catch any problems that might arise.

Having new tenants does mean you have to dedicate at least a few days to a month before you can turn over the property, depending on the severity of the damage done to the property. This means potentially not receiving a full twelve months of rent because you have to revamp the property for new tenants that will be moving in.

You can try to negate this period of vacancy by requiring a twelve-month lease or offering a slight discount for renewing a contract for the following year. Some students do take summer sessions, so having your lease be through the summer can be a desirable trait as students will sublet their room out.

Damage is inevitable.

College students can run the gamut of characteristics: some will be respectful, quiet, and studious while others will hold parties and act carelessly. The age group of people you will be attracting are young adults who may be living on their own for the first time. They may not know how to take care of their living accommodations (or they simply do not care).

Expect varying levels and degrees of property damage, so keep your decor minimal and relatively inexpensive. An unfurnished apartment could be desirable because it will keep rent down and if a tenant were to damage any furniture, it will be theirs.

Demand is high.

This is perhaps the most desirable quality of having a property in a college town: the demand will almost always be stable and high. Students will always be admitted to the university and will subsequently be looking for housing that is convenient. According to the National Center for Education Statistics, college enrollment has increased five percent since 2004. In 2017, around forty percent of young adults aged eighteen to twenty-four were enrolled in college. This translates into higher, steady prices for rent because of sustained demand. You can even start the leasing process a few months earlier than when a current lease ends because students start looking for next year’s housing months in advance.

Students don’t need a lot.

For the most part, students don’t need a lot of amenities. There’s no need for fancy electronics, hardwood flooring, or recessed lighting. Keeping it simple, efficient, and no-frills will make it easy for you to replace anything that becomes broken or damaged with minimal cost.

Having costly, luxurious amenities will mean that rent will be higher. You might just accidentally price yourself out of the market if you charge a higher rent than what other landlords are asking. Students are, more than ever, price conscientious thanks to student loans and debt. While you might be able to get a little bit more money, you could be significantly limiting your potential tenant pool.

Final Thoughts

College towns can be goldmines for rental properties if you are able to handle being more hands-on with your property and are willing to adjust to the somewhat unique demands of students. High demand means you’ll never have to struggle to find tenants, and high rental prices can make up for the hassle of renovating a property every year.

Keeping a property simple and luxury-free will alleviate any worries of damage, keep rent down, and allow you to be competitive within the market.