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Student Rentals Make a Great Real Estate Investment

Feb 11, 2008
The student housing niche is one that is rapidly growing in demand and can provide an excellent opportunity for real estate investors. There are pros and cons to this type of investment, of course, but in the long run, it can be a fun way to earn some money.

College students are always looking for decent places to live and are often quite willing to share with other students. Their standard of living is not usually that high, so you can get pretty good rental rates for regular houses, nothing special. If you have a regular four bedroom home, with two students per room, you can bring in a fairly good amount of cash each month. Let's say you could usually get about $1,200 by renting out the entire house, but if you receive $500 per room, you are nearly doubling your income!

College enrollment is expected to rise around 11% between 2003 and 2013, so the demand for student rentals will continue to grow. Even in times of economical crisis, people attend college, so this niche is considered to be pretty recession proof. It's a worthy investment, one that you can feel good about and still make money off of.

Another great reason to invest in the student housing niche is that education takes longer these days. At one point, college was 2-4 years of studying, then the students were out in the workforce. These days, it can take up to a decade or more to finish your higher education, meaning there is not only a higher demand for student rentals, but a longer term possibility of renting to the same students. If they like your house, they'll keep renting there, year after year.

The downside to student rentals is that they tend to be hard on houses. This can easily offset by requiring a damage deposit and the first and last month of rent in order to cover any repairs that need to be done after a school year of parties. You will also need to stay on top of rent, since students can be fairly transient and may default on their rent. However, these are fairly minor issues when you consider the higher rent earnings.

Keeping your student housing full shouldn't be too difficult to do. If you are a responsible and reasonable landlord who fixes problems as they arise, your first tenants will actually let others know about the house and you'll find that they bring in more renters for you! During the summer months, you can rent short term to students taking summer courses or those who are staying in town for work purposes.

The rent for student properties has risen at a higher rate than those for regular apartments, making this an excellent real estate investment. If you're looking for a sure-fire method to earn on your properties, student rental could be exactly what you need. It is definitely a market that won't be going anywhere and is worthy of investment.
About the Author
Seb Frey is a Capitola, California Real Estate Broker specializing in Santa Cruz Real Estate. He is fluent in Spanish and enjoys helping people find their piece of the American Dream in Santa Cruz. You can find Seb's blog at SantaCruzHomeBroker.com/blog.
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