The Financial Advantages of Buying a Rental Property Near a College

Fellow investors often ask me whether buying a rental property near a college is a wise decision. They’re curious because I own multiple properties in a college area myself, and so I’ve seen firsthand the profitability of these locations. When asked, I tell them it’s a smart strategy that can yield significant and steady profits.

There are actually many benefits to owning a rental property near a university that lead to significant financial gains, such as experiencing low vacancy rates, steady income, high demand, and more. With that in mind, let’s get started so you can learn about the advantages of investing in student housing.

The Profitability Factor of Buying a Rental Property Near a College

In 2021, Statista, a global data platform, presented figures showing that the U.S. student housing market saw a substantial investment of close to $10.1 billion. Such significant financial commitment reveals the appeal of off-campus student housing, highlighting rental properties in college towns as a profitable investment option. Ok, now that I have your attention, I’ll dive into the specifics of what makes investing in a college town such a smart financial strategy.

There’s a Constant Demand for Rentals Near Colleges

Investing in real estate within a bustling college town promises a steady demand for rental properties. A busy academic environment not only attracts thousands of students looking for off-campus housing but also creates numerous employment opportunities for a wide range of professionals, including professors, administrative staff, maintenance workers, and more. These individuals often move from other areas, searching for convenient living spaces close to their workplace. Additionally, it’s common for graduates to stay rooted in these towns post-graduation as they transition into their professional lives.

The bottom line is that property owners in college towns find themselves in a favorable position, able to cater to young professionals looking to stay near their alma mater while they’re not in a position to buy homes yet. This creates a diverse tenant base, ranging from students to young working professionals, ensuring that rental properties rarely stay vacant and promise a lucrative return on investment.

The Economic Growth Potential is Through the Roof Near Accredited Colleges

Economic growth potential skyrockets in areas surrounding accredited colleges because the mix of young professionals and entrepreneurs in these areas fuels economic expansion. A strong workforce boasting a college education drives the economy forward and keeps the city from declining. Also, colleges and universities frequently rank among the top employers locally, keeping the economy going and creating even more demand for housing.

Buying a Rental Property Near a College Can Provide Reliable Rental Income

College students typically go for long-term leases, a trend that minimizes vacancy rates and ensures a steady flow of income for property owners. Also, these lease agreements are often financially supported by the student’s parents, particularly in the case of undergraduates, which adds a layer of security to the investor’s income stream.

It’s also worth noting that many students have financial aid, which might be in the form of a scholarship or student loan, that’s allocated towards covering living expenses, including rent. This all translates into a virtually guaranteed payment structure for the landlord, a dream scenario for any real estate investor seeking to minimize financial risk. The assurance of receiving rent, either directly from the student’s parents or through financial aid dedicated to housing needs, is a financial advantage that sets college rental properties apart.

Take a moment to visit these two articles regarding rental income that you’ll find interesting:

• The Driving Factors Behind the Ability to Charge Higher Rental Rates
• Beyond the Stock Market Rollercoaster: Building Wealth with Rental Income

Rental Properties in College Towns Often Experience Steady Appreciation

Buying a rental property near a college can offer the opportunity for steady property value appreciation. Why is this the case? Well, a college in the area often acts as a driving force for local growth and enhancement. What I mean by this is that universities can attract businesses that cater to students, such as restaurants, cafes, and entertainment venues. This increased local business activity makes the area a more desirable place to live. As a result, the demand for housing, both rental and owner-occupied rises steadily, pushing property values up along with it. Adding to this, colleges often experience enrollment growth, which further increases the need for off-campus housing and contributes to the long-term value increase of nearby rental properties.

When you have property appreciation, you then have increased equity that can be leveraged when investing in an additional property. This is one reason why getting set up in a lucrative, bustling location is so essential. To learn more about using equity, dive into our article – Harnessing the Power of Home Equity to Buy a Rental Property.

Best City for Investing in Rental Properties Close to a College

I personally own multiple rental properties in Lubbock, TX and I highly recommend this area to any one seeking out a good location to invest near a college. This city sports Texas Tech University that has over 40,000 students and numerous people who are employed at the college.

This many students, as well as employees ensures a continuous need for housing. In addition to having a large student base in this city, Lubbock boasts a steadily growing population, a booming economy, and a diverse and robust job market, making it a prosperous location to invest in rental properties.

The presence of several Fortune 500 companies also contributes to a consistent pool of long-term renters. Lubbock also serves as a central healthcare hub, employing thousands which keeps the demand for rentals high. My properties frequently have waiting lists to get into because of this high demand. On top of this, Lubbock ranks among the top 10 recession-proof cities which makes it the ideal location to invest. See our article on this topic that takes a deep dive into how secure and profitable this location is for real estate investors – Lubbock Recognized as Recession-Proof City and Maintained a Strong Rental Market Throughout Pandemic.

If you’re interested in buying a rental property near a college, Morris Invest can provide you with a cash flowing new construction property in the city of Lubbock. We take care of all the details for you, even placing a reliable tenant in your rental, as well as assigning a professional property manager. Please don’t hesitate to reach out to the team at Morris Invest for any questions you might have about Lubbock or the investment process in general.

In the meantime, explore the resources below to gain insight into achieving financial freedom through real estate investing:

• The Financial Freedom Academy
• Freedom Number Cheat Sheet
• 90-Day Financial Empowerment Bootcamp
• Morris Invest & SDIRA Program Overview

Before you go, grab a cup of coffee and enjoy a tour of one of our new construction properties located near Texas Tech University in Lubbock:

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