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Why is student housing a great investment?

On Behalf of | Nov 7, 2023 | Commercial Real Estate |

The National Multifamily Housing Council reported the demand for student housing should grow by 0.8% each year until 2031.

Investing in student housing is a wise move for individuals seeking commercial real estate opportunities. There are several compelling reasons why student housing stands out as a great investment option.

High demand

The demand for student housing remains consistently high. Every year, a new wave of college students enters the housing market, and universities often cannot provide on-campus housing for all their students. This creates a constant demand for off-campus housing, ensuring a reliable stream of tenants.

Reliable income

Student housing tends to exhibit steady and reliable rental income. The lease terms for student housing typically align with the academic calendar, with leases typically lasting a full academic year. This means that you can count on a consistent income stream without the uncertainty of frequent vacancies.

Higher rates

Additionally, student housing often commands higher rental rates than traditional residential properties. Students are willing to pay a premium for housing in a convenient location near their university.

The concept of bed density also works in favor of student housing investors. With shared living spaces and multiple bedrooms in a single unit, you can maximize rental income from a single property. This approach allows you to house several students in a single unit, which can significantly increase your cash flow.

Longer tenant retention

Students often return to the same housing unit year after year, simplifying the property management process and reducing turnover-related costs.

Investing in student housing can provide diversification in your real estate portfolio. Unlike other types of commercial real estate, student housing is not heavily dependent on the broader economy. Even in economic downturns, universities tend to maintain their student populations, ensuring a stable demand for housing.