14 June Investment Opportunities in Student Housing June 14, 2023 By sma Commercial Real Estate News, Property Investment, Property Management apartment, business tips, multi-family property, real estate trends, special purpose facility 0 INVESTMENT OPPORTUNITIES IN STUDENT HOUSING June 14, 2023 | Property Investment, Property Management, Commercial Real Estate News | real estate trends, business tips, multi-family property, apartment, special purpose facility One of the keys to having success in commercial property investments is to stay on top of market trends and forecasts. While unpredictability in recent years has meant that diverse portfolios are the most resilient, investors are slowly discovering stability and confidence in some surprising places. Of late, many property investors are turning to student housing for their next option, and it’s little wonder why. Why Student Housing? In comparison to other commercial properties, student housing has recovered at a much quicker pace from the effects of lockdowns and the pandemic. While there has been a consistent struggle between CEOs and office workers as preferences for hybrid and full-time remote work have grown in prevalence, students’ choices aren’t changing when it comes to their education. According to the National Center for Education Statistics, even though college enrollment dropped by 15 percent from 2010 to 2021, enrollment is on track to increase by 9 percent throughout the next decade. Though undergraduate students are more willing to incorporate remote learning into their collegiate experiences than in previous years (as reported by education analysts at EdSurge, among others), the lack of sustained impact that universities are seeing from the pandemic seems to prove a unique resiliency from education-related property ownership. Commercial and residential real estate are both very much influenced by interest rates and the ebb and flow of supply vs. demand - things out of the control of the average investor. As projections seem to suggest though, the need for student housing is only growing, and universities are struggling to keep up. Next to a lack of stability in retail and office properties, student housing may be rising in prominence for investor portfolios. Special Considerations with Student Housing Investment Some investors see student housing as a valuable asset with a more reliable cycle of tenants in comparison to traditional multi-family properties. For those interested in stepping into this space, they should be aware that strategies that might work for apartment buildings or condominiums, don’t necessarily work when transitioning into student housing. Although there should be a more consistent audience of tenants each school year, property owners should be aware of massive turnover in occupancy each summer. In addition, while students are generally much more lenient when it comes to the quality of their housing options (the alternative for many is living in the dorms, after all), opting for cheaper materials and lower amenities may also invite reckless treatment from tenants, and more frequent repairs. The prospect of working with a younger than usual tenant base and managing a different maturity level can be enough to dissuade some from investing in student housing altogether, but there are built-in assurances worth considering as well. For example, although undergraduates are usually too young to have a reliable credit record to reference, their parents should ensure that rents are reliably paid. Though there are unique traits when it comes to managing a student housing property, the level of interest in this field is undeniable. Strategies for Success with Student Housing If you’re looking to invest in student housing, there are a few things to keep in mind for the best ROI. First, recognize the benefits that come with regular tenant turnover. Some states prohibit adjustments to rental fees within a lease agreement. Regular vacancies and renewals mean that property owners have more opportunities to adapt to changing rental standards. When it comes to competing for attention and keeping vacancies at a minimum, it’s important to prioritize things that are important to a younger client base. Access to laundry, especially appliances within each unit, is particularly appealing for students who are looking to save time on chores. When it comes to on-location amenities, consider fitness facilities as well as quiet common spaces for studying to fill the majority of your tenants’ needs. Finally, although most properties will benefit from an experienced property manager, student housing may require someone on-hand to be a little more involved than usual. For property investments that may be one of your more reliable purchases, student housing could be a surprising winner. Some commercial properties require more maintenance than others. To get a clear picture of your properties, there’s no better option than ordering an inspection. Contact your local NPI inspector for a quote today! Comments are closed.