How to Invest in Student Housing Property

As long as there are colleges and universities, there will be a need for student housing. If you live in a college town or near a university, rental property for students may be the perfect investment for you.

Difficulty: Moderately challenging

Instructions

Things You'll Need:

• Investment Advice
• Purchase Agreement
• Real Estate Agents
• Real Estate Attorneys
• Tax Services

1. Consult with university housing officials to find out about the demand for student housing in your area and current rental rates for students.

2. Investigate properties for sale within a short distance from the school, and obtain comparable prices for similar properties in the area from a local real estate company.

3. Consult a tax advisor about the tax consequences of investing in student housing property.

4. Consider your targeted property's security, parking and access to university shuttle services for students.

5. Estimate possible rental income from a particular property based on current rental rates for students in the area, then determine possible cash flow (or loss) for the property by subtracting taxes, insurance, mortgage payment, maintenance, repairs and other expenses from the estimated rental income.

6. Determine who will manage the rental property and how you will handle vacancies between spring and fall terms.

7. Submit an offer to purchase the property based on comparable prices for similar properties in the area and subject to appraisal, loan approval and thorough inspection of the property.

Tips & Warnings

• Ask an attorney or real estate agent to review all contracts and agreements.
• Set the ground rules with students from the start by clearly spelling out the terms of the lease and presenting a price list for damages.
• Keep a tight rein on damage control by demanding hefty damage deposits and conducting thorough inspections throughout the year.
• Establish and maintain an emergency fund to cover unexpected repairs and expenses on your student housing property.
• Buying student housing property is often much easier than managing the property and student residents!

on 6/30/2006 Make sure you always get the student's parents as guarantors. Student loans don't always cover the student lifestyle and you may find yourself without payments.

on 11/22/2005 If your unit is trashed and in need of major repairs, a student is probably not going to have the cash on hand to cover the damages. You can sue, but you can't get what isn't there. Rent to his or her credit-worthy parents instead. Students are more likely to behave in an apartment if they know they must also answer to their parents. The parents will also keep a closer eye on an apartment if they know their money is on the line. If your unit is wrecked, you have a better chance of getting your money back.

on 11/22/2005 If it's at all possible and your children are going to the same college, buy a property they can live in while going to school. You can rent to their roommates, and your kids can manage the property for you. This can be a win-win situation for everybody.