“What are the best places to buy investment property?” – That’s a question whose answer any real estate investor wants to know. If you’re looking to invest in real estate but can’t decide on an area or a neighborhood, then you should look for the closest college town that you can invest in.
The best places to buy investment property are locations with high population traffic. You want your real estate investment to be a success. For a rental property, this success translates into a high number of tenants and a stable rent. Both of these can be found in – you guessed it – college towns!
College towns are among the best places to buy investment property for a multitude of reasons. And while there are some downsides to investing in college towns, the advantages that they bring to any real estate investor far outweigh the disadvantages, keeping college towns as a runner up among the best places to buy investment property.
Related: Best Places to Invest in Real Estate in 2017
So what are the advantages that come alongside investing in a rental property in college towns, and how do you make the most use out of them?
A Large Pool of Tenants
The main reason why college towns are among the best places to buy investment property is the fact that college towns are tenant magnets.
Not only will you have a large pool of students who are looking for accommodation, but you also have a large number of faculty staff, administrative employees, and others. Basically, a college campus is a concentration of different kinds of potential tenants, from college teachers with a steady income, to freshman students whose parents pay their rent for them, you will never run out of tenants looking for a place to rent.
A Stable Rent
College towns are the best places to buy investment property not only because they offer real estate investors a large pool of tenants, but also because they have a relatively more stable rent rate than other towns. This is due to college towns having a very high demand on rent, but not as much on property purchases.
The constant turnover of students each semester combined with the ambitions of the faculty staff and the constantly on-the-move nature of their career choices makes it so that people are not looking for stability or commitment to their place of residency. This increased demand on rental properties results in maintaining strong and competing rent prices without affecting the demand.
Another factor associated with rent which makes college towns among the best places to buy investment property is that students don’t usually pay their own rent, but their parents or the college itself pays the rent. This could allow the real estate investor to ask for higher rent prices, and in some cases even negotiate deals with the university to manage the tenants and their payments for you.
Note: Click Here to see the best performing College Towns across the US!
The Area
Another factor that makes college towns among the best places to buy investment property is that the area sells itself. Investing in college towns could save you a lot of time, effort, and money which you would otherwise spend on marketing and advertising your rental property. This is because college areas pulse with life and culture and all the other goodies that come with them, such as:
- Entertainment: What better form of marketing for your rental property than the guarantee that your tenants will always have something entertaining to do in the area? College towns are usually full of theaters, museums, and art exhibits, in addition to all the sports events that the college students take part of.
- Food and shopping: There are certain kinds of businesses that work very well in college towns; restaurants and shops are among the best examples of these. This means that your rental property will always be close to a restaurant and a shop, making it all the more attractive for all kinds of tenants.
- Transportation: From university shuttles, through buses, to taxis, a college town has them all. College towns usually offer a wide variety of transportation facilitation due to the large number of high-energy college students who are moving around the town all the time, which makes your rental property more attractive.
Related: Location Location Location – Is Location Really All in Real Estate Investing?
But…
Although college towns are among the best places to buy investment property, you also have to keep in mind that there are also some downsides to investing in college towns, which include:
- Tenant turnover: Although college towns offer a large pool of tenants, these tenants are most often short-term tenants. This means that your rental property will not only be seeing a lot of tenants moving in and out, but it means that TOO many tenants could be moving in and out. This is due to students normally moving from one place to another, and sometimes from on-campus to off-campus accommodations, very often between the semesters.
- Off-season: Another downside to investing in college town rental properties is that most of the year your pool of tenants will be large enough to keep your property occupied. But during certain times of the year, such as the summer season, you will find the number of tenants shrinking dramatically because only a minority of students usually attend school during the summer.
- Wear and tear: Lastly, when investing in college towns, you have to keep in mind the nature of the tenants that might be renting your property: college students. We’ve been there, and we know what happens in places where students reside. Whether it is carelessness, passion, or a surplus amount of energy, these students can tear your place apart. What was once a beautiful kitchen could become a less than beautiful house-party bar. What was once a high-quality expensive AC could become a bowl of ice. We don’t always have an explanation for the things that we might find in a house that was once rented by college students, but we know that they had fun, and it made our investment a lot less fun than we would like it to be.
Note: Click Here to find the best performing College Towns anywhere in the US!
Related: The Guide to Renting to College Students
Bottom Line
College towns remain among the best places to buy investment property. The large pool of potential tenants, the stability of occupancy, and the fact that the area sells itself are all factors that make them the best places to buy investment property. However, you should also keep in mind the different issues that may arise before owning an income property in a college town, and plan your moves accordingly. You might want to hire a professional property management company to take the pressure of having to deal with spoiled college students trashing your property yourself, or you might want to skip the students and aim for faculty staff and administration. This, however, can decrease your potential tenant pool by a lot. But with the right planning and marketing efforts, this won’t mean that your occupancy rate will drop, it will only mean that your maintenance costs will decline.
To find the best college town to make your best real estate investment, you can use Mashvisor: A real estate investing tool which can provide you with all the data you need to make your investment decisions and help you decide on the right place to rent out, and the right amount of rent price to ask for, in addition to several other features that can carry you straight to the top of the real estate market.