Moving a child into their first college dorm has been a right-of-passage for many families as an offspring moves onto the next phase of their life. However, the dorm system is losing its popularity and more and more students are choosing to live off campus.
College towns or neighborhoods with a large undergraduate population often have much higher rents than other areas. For some families, it makes more financial sense to invest in a condo or small house for their student and collect rent from roommates during college years, rather than paying high premiums for campus housing that yields no return.
High demand in these areas means that even if investing parents aren't able to sell right after their child graduates they may still be able to profit off of renting the apartment out to other students.
"There has always been a shortage of housing for students," said a real estate market expert. "For this reason, college and university real estate investments in this area over the years have been a huge success to both long-term and short-term investors."
Owning property near a campus comes with other obligations, though. Unlike renting to a couple or a family, college students are often inexperienced tenants and may not care for the property as well as older renters. Experts advise using professional managers to help keep the property in good repair. College students may also not know how to properly complain about a condition in the apartment or settle a dispute about rent or utilities. For this reason, it's important to take the time to clearly lay out the terms of the lease and to make sure to have a lease that provides for a wide variety of circumstances.
Our firm offers a variety of services to property owners or prospective buyers in Oakland County. More information is available on our Michigan real estate website.
Source: U.S. News & World Report, "Property in College Towns a Boon to Real Estate Investors, Parents," Meg Handley, August 22, 2012.