Investing in property to rent to college students has its pros and cons. There are close to 80 million enrolled each year, which means there is a lucrative market for you if your investment goes well.

The con side? They'll leave behind an empty building once they graduate. Needless to say there is much to consider before putting your money, time, and effort in this investment strategy. Here's a guide of some considerations. Also, let's discuss how the pandemic has particularly impacted this class.

Is a stable investment?

College towns are a great place to invest because the economy is stable. Renters in this area will have their rates remain steady even when schools aren't in session, giving you more stability for your investments than other areas. That even takes into consideration holiday breaks.

There's less risk involved with investing here as well. Some fluctuations might occur out of season; if the market offers much employment after graduation, then the investment would be more stable most likely.

Is it easy to get into?

College rental properties are not for the faint-hearted though. If you want an easy investment then engage a property manager. They'll handle day-to-day needs of your tenants and cut down on labor, repairs or anything else. Though this will cut into your overall profit. However, young tenants are less experienced renters. There are some headaches that come with a demographic who has just moved out of their parents house. A property management company will deal with those problems for you.

Every college town has a choice of experienced property management firms that are great for anyone considering investing in their community.

What is really like to have young tenants?

Most students want a quiet room or apartment where they can study without being interrupted, somewhere private to do laundry (or other work), and an environment that feels safe. But of course, if the college town is known to be a party town, do expect higher than average repair costs and other expenses that come with a high level of socializing.

Having strict tenancy agreements and reference checks will be as important for student renters. It's crucial to have at least one parent or guardian co-signing the agreement. Your property management company will also enforce this. You should also ensure everyone has renter’s insurance coverage. Just in case.

There's an increase in single occupancy due to the pandemic. Is there anything I should know about that?

Having one student tenant is theoretically supposed to mean less stress for you, but it can backfire. If that person leaves town suddenly or fails rent payments without warning, then there's a chance of being out pocket instantly.

Having multiple students share your college town rental property might result in some extra management and maintenance headaches-but at least when something goes wrong (like someone not paying), you'll still have some cash flow. Also, you have multiple tenants giving you word-of-mouth marketing after the college term ends.

So what type of property should I look for?

A major factor in choosing the type of property you want to invest in will come down between how much money is available and where it's located. All properties closer to campus will be more expensive on average. However, many of those will also have higher expenses because they tend to be older, more established buildings. Sometimes, they're historic given the type of university they're located near. At the same token though, the demand for apartments closer to campus is always higher.

The second factor that you will need to consider when looking for a rental property is the local housing market. This means researching how many one-bedroom apartments or homes are available in each area and choosing accordingly. There are some students who definitely want a single unit, e.g. a law student in the city. Some areas, single family homes are actually more common. In suburban college towns, there's an even mix of apartments and single family homes. Single family homes are common in rural. Therefore, you will need to take the average rent per square footage of that given property type to see if the markup would make sense for your cash flow.

There is more to college towns than meets the eye. Before you make the decision to invest in student housing, do know the demand for housing is also contingent on enrollment. So add that variable when doing your calculations. Nonetheless, even post-pandemic, there will always be a need to go to school. That said, there'll always be a need for student housing.

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