An investment in your future, they call it. That good old, tried and true college education and the stamped and sealed diploma earned shortly thereafter. You dedicate thousands of dollars, millions of minutes, and an innumerable amount of brain cells in the training it takes to become a certified professional. You hope, or rather expect, that all that you’ve invested will afford you great returns – a respected career, a lucrative salary, and more. There’s some risk, but there’s also the promise of great reward.
All investments offer some element of chance in exchange for the possibility of positive returns. The bigger the risk, the bigger the reward. While the “investment” a college education may seem like a no brainer, others – like that of stock markets, start-up initiatives, and, of course, the real estate industry – are a little less certain.
Purchasing rental property in your college town may involve more chance than the education investment itself, but it’s a great way for students to begin to explore various financial ventures. In fact, here are three big benefits to buying college town real estate.
- Home Prices are Down, Rental Rates are on the Rise
According to recent statistics compiled by the real estate website Zillow.com, an increasingly strong demand for advanced education has caused rental rates in college towns to rapidly rise, and due to the almost certain increases in demand for diplomas and degrees, these prices are expected to grow for years to come. At the same time, the home buying market remains affordable in the ongoing wake and recovery of the early turn of the century financial crisis.
What does this all mean? It means for college communities, rental rates are high and will get even higher, while home-owning and the purchasing of property is more affordable than it’s ever been. Hence, buying with the intent to rent to prospective students is not only an affordable option, but one that offers great potential returns.
- Buying to Rent Eliminates the Expenses of On-campus Living
Did you know that in the United States, nearly half of total public school costs and a third of total private school costs, are the product of on-campus housing alone? That’s $10,000 per year and, if students are lucky enough to graduate in the traditional four-year period, nearly $40,000 altogether? That’s a big chunk of change, and for what? A dorm room that’s less than half the size of Kim Kardashian’s handbag closet, with a bathroom shared by two dozen twenty-something boys and girls?
Buying real estate in college towns enables students to live more comfortably while at the same time cutting costs. Off-campus living eliminates the expense of college dormitory rates, whether students attend Loyola Marymount University in Lis Angeles or achieve an online degree at WSU Online.
- There’s Even the Possibility of Making Money
Buying rental real estate typically goes like this. A parent or student makes an initial investment in a property or unit, rents it out for the duration of the student’s educational career, and then sells the space back post-graduation. It’s a short-term prospect that, in most cases, ends in a wash. Yet by merely breaking even, students and parents have already saved the $40,000 plus on student housing (see #2).
Then, of course, there are those that actually make money. Remember, the bigger the risk, the bigger the reward. They invest in property merely as a means by avoiding the costs of campus living, but begin to turn a profit over time by renting out to students and/or selling back the space for more than the purchase price.
Optimistic prospects, cutting costs, and potentially making money? It’s a gamble many smart students and parents alike are putting their money on.