Property Investment Opportunities in College Towns

One sector of the country's real estate market that will likely never endure a substantial slump is student housing. Millions of young adults head off to college for the first time each fall---many of whom choose to reside in off-campus rental properties instead of dorms.

Due to this consistently high demand for apartments in college towns among the 18-22 crowd, many property investors know just how lucrative properties in these communities can be.

"Demand and supply conditions for housing are bad," Fiserv chief economist David Stiff told MarketWatch last year. "But in college towns demand conditions are slightly better. There's a stable source of new demand every year."

Buying College Town Real Estate

According to Inman News, obtaining a property in an area with numerous colleges and universities is a very attractive proposition for many investors.

With property values low in a number of real estate markets nationwide---both big and small---that have numerous undergraduates renting or looking to rent, investors would be wise to perform due diligence and investigate the pros and cons of putting down their money on college-town residences, the source states.

Inman News notes many people investing in these properties aren't just major development firms building new properties or hot-shot investors with dozens of residences in their name. Instead, a number of these rental property buyers are new to the world of real estate investment, and are only looking to secure a few properties to create modest revenues by leasing them out to college students.

A report by MSNBC states housing investors searching for properties in college towns should do their research and ensure they know what they're getting into, though. While prices, neighborhood and community safety and an area's school enrollment figures should play a role in an investment decision, the source states location to nearby schools is the most important factor to take into consideration when contemplating a real estate investment.

Hot Student Housing Markets in 2011

Nearly every one of the major U.S. markets can be considered college towns, or at the very least, have a number of smaller college towns around them. Some markets, though, have proven to be the marquee spots for investors to put down some capital and secure properties, a survey by a real estate information website indicates.

With substantial average rental rates, stable property values and an always-high demand for apartments in a college-rich community, including notable schools Harvard and MIT, Boston topped Move.com's recent list of the best college towns for prospective property owners to invest in. The list was based on a report of American cities with the best schools from U.S. News and World Report.

The nation's capital also ranked highly on the website's list. Washington, D.C.'s property values are some of the highest in the nation, and the district is one housing market that has remained strong throughout the housing crisis. With substantially populated colleges and universities in D.C., including Georgetown and George Washington, renting in the area continues to go through the roof. Additionally, affordable median list prices for properties in metros with many schools, including Nashville, Chicago and Houston, makes them viable candidates for real estate investment, according to the survey.

"Local markets with universities or colleges can be an attractive option for many local real estate investors," Move chief executive officer Steve Berkowitz said regarding the survey results. "Housing demand in college towns is generally high and vacancy rates are usually low. Combine the supply and demand ratio with rising admissions and the five percent rise in rental rates expected by the end of the year, and rental property in college towns can be a smart option for the right investor."