One of the best places to invest in real estate is in college towns. Some college students may be difficult, yes, but this is of the few cons of renting in college towns. First benefit of renting to students: there’s always demand in college towns. With this higher demand, you could set the rent at a higher price, within reason, of course. Students will usually rent for a semester at a time. This is great since you’ll know when demand peaks….and when it plummets. Summers will likely bring along vacancies, but you can always rent out to longer-term tenants or list the property on a short-term rental lodging site such as Airbnb.
What else makes college towns among the best places to invest in real estate? Long gone are the days when due rent is not paid. Most students have their parents or scholarships pay the rent for them. Sometimes the payments are covered in advance.
Such benefits make investing in college towns worthwhile and profitable. But before you decide to invest in a certain college town, it’s important to have direction as to which college towns should be targeted. This list of college towns have the highest rental incomes and have profitable for investors in the past.
The cash-on-cash returns and cap rates only represent city averages. Meaning, your property should have a higher return as a single property.
The median home prices represent single-family homes, townhouses, and condos.
Median Property Price: $253,534
Monthly Rental Income: $1,413
Cash on Cash return: 2.03%
Cap Rate: 6.79%
Starting off our list is the Steel City, a popular mid-sized college town. With 68 colleges and universities, 10 of them within a 10-mile radius, it’s no surprise the city is among the best places to invest in real estate for college towns.
Pittsburgh’s property prices are relatively low nationwide and compared to other college towns. In fact, Pittsburgh has the lowest median home prices on this list. Pittsburgh is also among the top manufacturing economies in the country, a big plus for students.
Another perk of the city is its low cost of living, even in the downtown area. For instance, many students in the city do not use cars. Only 12% of students at Carnegie Mellon have cars on campus. Reliable public transportation makes the city attractive to college students. The city also offers plenty to students for an entertaining college experience. Being ranked number 1 for nightlife options for students, having popular sports teams, and hosting fun festivals makes studying in Pittsburgh pleasurable for many students.
With low prices, many universities, a powerful economy, and a vibrant student atmosphere, Pittsburgh is among the best places to invest in real estate for college towns.
Median Property Price: $364,306
Traditional Monthly Rental Income: $1,943
Traditional Cash on Cash return: 2.29%
Traditional Cap Rate: 6.45%
Chi-town is well-known to be among the best places to invest in real estate, whether it’s traditional or Airbnb. The city has over half a million college students attending various institutions, among then the University of Chicago and DePaul University. Chicago properties are relatively inexpensive compared with those in the next three cities. This, along with being one of the largest college towns, should be a good incentive to invest in Chicago college towns.
Median Property Price: $651,336
Monthly Rental Income: $2,648
Cash on cash return: 2.95%
Cap Rate: 5.41%
The nation’s capital is among the best places to invest in real estate. About 300,000 students, attending universities like Georgetown University and George Washington University, reside in the city.
Life in DC as a college student is truly remarkable, and this unique experience is what attracts many to its college towns. Some college towns are just minutes away from the country’s most notable national monuments. Internships relating to the government attract many from all around the nation. You can’t go wrong by investing in a DC college town.
Median Property Price: $523,000
Monthly Rental Income: $2,827
Cash on Cash return: 1.65%
Cap Rate: 4.15%
Although Boston’s median home prices are continuing to rise, the city will be among the best places to invest in real estate in 2017. The city is home to prestigious institutions including Harvard, MIT, and Boston University, among 80 colleges and universities. Students from around the world come to study in Boston.
With students as 7.32 percent of the city’s population, finding student tenants shouldn’t be too hard. And with Boston’s small town vibe, many students prefer to rent in its college towns.
Median Property Price: $908,027
Monthly Rental Income: $3,245
Cash on Cash return: 2.07%
Cap Rate: 4.52%
Topping off our list of highest rental income college cities is LA, the second biggest college town in the country. This may not be much of a surprise, since LA is notorious for its expensive rent and high cost of living. Still, when done properly, Los Angeles is among the best places to invest in real estate.
You’ll definitely have a large pool of students to rent to in LA, 974,013 to be exact. With over 60 colleges and universities, among them UCLA and the University of Southern California, the city blooms with students.
Despite the very expensive rent, LA is seen as the friendliest big city by students. In order to get around high rental prices, students rent units together in groups. This is typical for almost all college students, but more so with LA students. Therefore, if you decide to rent to college students in LA, make sure the unit contains multiple rooms.
If you’re looking for consistent rent and demand, then investing in college towns is the way to go. Median property prices in certain profitable college towns are starting to rise. Be sure to buy quickly!
To find the best places to invest in real estate, traditional and Airbnb, visit Mashvisor.