As the summer comes to an end and back to school season is in full swing, shopping is on the minds of students and parents everywhere. For many this means purchasing school supplies, uniforms and backpacks; however, parents of college-bound students might be thinking of a more substantial purchase – a rental property. Purchasing rental properties in college towns has become a greater consideration for parents whose children are heading off on their own.
Parents are opting to purchase condos, townhomes or smaller homes for their children to live in during their college years. A portion of the mortgage is paid for by roommates, and upon graduation they can choose to retain this investment by renting to other college students or sell the home sometimes earning a notable return.
“I had one client who bought an investment condo in Arlington, VA. She wanted an investment property and she also wanted a nice place at a reasonable cost for her daughter who was attending Georgetown University,” says Nancy Alert, a local agent. “Her daughter got a roommate and the roommate paid half of the mortgage. After her daughter graduated from Georgetown University the property was sold at a substantial gain.”
Investing in college towns has also become a growing option for new alumni interested in purchasing their first home, as well as seasoned investors looking to purchase in localities where the demand for rentals is high. There is a strong, stable market for those who would like to target the college and graduate student renters.
“Local markets with universities or colleges can be an attractive option for many local real estate investors,” says Move, Inc., Chief Executive Officer, Steve Berkowitz. “Housing demand in college towns is generally high and vacancy rates are usually low. Combine the supply and demand ratio with rising admissions and the five percent rise in rental rates expected by the end of the year, and rental property in college towns can be a smart option for the right investor.”
According to a national survey conducted by Move, Inc., real estate investors are expected to outnumber traditional home buyers in local markets by three to one within the next two years. Additionally, 56.5 percent of those buyers intend to put their investments to work as rental properties.
Recently Move, Inc., also released a list of the ten college towns for those investors exploring their purchasing options. This list is based on the leading universities featured in US News Rankings and Reviews list of best colleges in 2011.
Washington DC made it into the list of the featured top five. The top five college towns featured by Move, Inc. in this 2011 / 2012 back to school investors review include:
As always, consult with an experienced real estate professional that can help you to identify and explore options that will help you meet your purchasing goals.