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Trending: Rental property owners see rising demand and a high rate of return on renting to college students.
Alternative housing for college students isn’t usually the top priority for most college students who assume the dorms will be a suitable place for the next 4 years. But if you could tell your kids one bad memory of your college days, it would probably have something to do with the close-quarters and shared bathrooms of college dorm life. The dorms built for the Baby Boomer generation in the 50’s and 60’s don’t cut it for the Millennials, who now claim the title as the largest population segment. Today’s college students are picky and many are willing to pay a higher price to get what they want—space and amenities.
Colleges and universities understand the housing situation and are trying to keep up with the rising admission rate, lack of available dorm rooms and the anticipated demands of the newest generation of college students. The universities admit they would rather spend their limited money on academic programs and leave the living spaces to developers and other off-campus housing options.
This provides an ideal opportunity for rental property investors in college towns to provide alternative housing for college students—but there is a catch. Today’s college students have high expectations for their residences and many new student housing complexes are winning this competitive space by offering everything a millennial college student would want. Furnished apartments, outdoor living spaces, in-unit washer and dryer, game rooms, swimming pools and included utilities like high-speed internet and cable are some of the “basics” today’s student complexes are offering.
According to the Miami Sun-Sentinel, the average price for this type of student housing on campus is $870 per month per bed, with most apartments accommodating 3-4 bedrooms. That price might seem a little steep on a student budget, but a local real estate broker told the Sun-Sentinel that students are often seen by traditional landlords as high-risk tenants, which just opens the door for these facilities to charge a premium and cater only to students.
Off-campus housing provides more freedom, options, space and privacy than a dorm room, can often be a less expensive option and can also offer the students what they want. The demand for off-campus housing will continue to grow and be competitive, but offers a high rate of return for the right investor.