Why Student Housing Is a Lucrative Investment Opportunity

Student housing provides excellent investment returns and has been shown to withstand economic downturns better than other rental property types. However, gaining access to this asset class requires more work for individual investors. Millions of students spend four years pursuing their degrees, meaning they must live somewhere. It keeps vacancy rates low in neighborhoods near universities and colleges.

Easy Cash Flow

Student housing provides easy cash flow for investors. Unlike other rental properties, where the property owner has to cover mortgage payments and maintenance expenses, student housing landlords have a steady income source from students renting their rooms on short-term leases. Students prefer living off-campus because it can provide a more private environment, but they also want to be close to their universities. It makes David Adelman campus apartments and other student housing an attractive investment opportunity for investors who wish to earn higher returns. Student housing landlords can charge rent by room instead of setting the entire property to a family or individual. It allows landlords to increase rent and profit even if some students move out after graduating or cancel their leases.

Low Vacancy Rates

Students have turned to off-campus housing, with many universities closing or reducing their capacity during the COVID-19 pandemic. It is excellent news for investors because student housing properties are consistently occupied. Additionally, because students lease by the bedroom, landlords can charge higher rents than a single-family home would receive on its own. Some landlords have even reported being able to set up to 200% more in rent for homes within walking distance of campus.

Furthermore, the student rental market is well-served by investors looking to add lower-value properties to their real estate portfolio to diversify it. Investors can purchase individual off-campus housing units that are easier to maintain and manage than larger multifamily complexes. It’s appealing to investors who can only buy part of the development.

High Retention Rate

Student housing offers a unique community experience for students. Living with fellow college students teaches young adults the value of cooperation and teamwork. They can also exchange various experiences and skills with each other, which may help them build their future careers. When deciding where to live, students want to be close to their universities and have a sense of community. Many colleges offer residential communities on or off campus. These communities can include Jack-and-Jill-style rooms, suites, or apartment-style housing. Student housing developers can assess the performance of their buildings and ascertain whether they are drawing in rent by utilizing several key performance indicators or KPIs. For example, occupancy rates are essential measures of demand, and tracking this KPI can help them stay competitive in their market.

High Yields

Student housing is a popular investment opportunity, offering high returns on your investment. In addition, this asset class has a higher ROI than many other rental properties because students pay rent throughout the year. However, many student tenants return home to their parents during the holidays and summertime, resulting in seasonal vacancies. You can use short-term leases or market your property as vacation rentals to maintain rental income during these times.

Investing in student housing is also a great option because it is often turnkey, allowing you to quickly generate cash flow without the hassle of renovations or remodeling. In addition, most PBSAs have on-site management and maintenance teams, making them a hands-off, fully managed investment opportunity. Lastly, most PBSAs provide rental assurance periods, giving investors a risk-free, guaranteed income while they wait for their development to be fully occupied by students.

High Demand

The student housing market is one of the few sectors that consistently experiences a stable demand throughout recession periods. Students want to live close to their universities and enjoy college life experience. Since the coronavirus pandemic emptied K-12 schools and forced high school students to take online classes, students have been eager to embrace campus life again. It has led to a spike in demand for housing. Considering that Gen Zs are said to be the “loneliest generation,” student housing increasingly focuses on community-centered amenities like communal study nooks and strong Wi-Fi. These developments could help to attract more tenants to your property.