College and university towns typically have a steady stream of incoming students and demand for off-campus housing. New college students arrive on campus every year, so the demand will always be present. In October 2021, 61.8% of high school graduates enrolled in universities or colleges. Despite a dip in 2020 because of the COVID-19 pandemic, the National Center for Education Statistics projects college enrollment will recover and remain steady over the next eight years.
An increasing number of students will likely strain the housing available in many college towns. While colleges may offer on-campus accommodations for first-year students, many colleges do not have the capacity to offer continuing students the same opportunity. As a result, most students probably need to find housing elsewhere.
The popularity of off-campus housing creates a reliably high rental demand. Unlike other kinds of real estate investment, student housing tends to experience a steady flow of demand as students enroll in the nearby university. Student housing investment returns tend to be reliable, especially near universities with high rental growth.
With higher rental demand comes the possibility of charging higher rents. Especially if the property is in a highly desirable location, a property owner can often get more rent from a group of college students than a small family. Landlords generally charge rent by the room instead of a flat rate for the entire house per month. For example, a three-bedroom house that would rent for $1,500 a month could pull in $1,800 a month if you rent each room for $600 a month. Other landlords may choose to charge each student a flat semester rate for a property.