Student Housing | Discover How to Invest in Real Estate With These Top 9 Lucrative Strategies

Learn how to invest in real estate with these 9 proven strategies. Student housing offers steady demand and income potential.
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There are many who agree that student housing is a good investment. It is a real estate sector that typically experiences consistent demand and low vacancy rates. As such, it offers savvy investors a potentially consistent income stream.

One of the most important real estate investment trends to watch is portfolio diversification. Student housing rental properties offer one way to diversify your investments in Real Estate.

Discover your options and learn how to invest in real estate in the student housing market with these top 9 strategies. This guide will help you find the perfect investment for your specific budget and investment skills.

What Is Real Estate Investing?

Before we discuss how to invest in real estate, within the student housing market, let’s consider what real estate investing actually is. Real estate investing consists of putting capital in the real estate market in some way to earn a profit from it (in contrast to purchasing a residential property as a home).

Much like other forms of investment, real estate investments allow you to generate income and build wealth (through rental income), or create a more diversified portfolio. However, unlike shares, stocks, and bonds, real estate assets are more tangible assets; they are physical properties you own.

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What is Student Housing Real Estate Investing?

Student housing is accommodation used by university or college students. It offers them a place to live, study, and socialize with other scholars. There has been a dramatic rise in the demand for purpose-built student housing, and with it, a rise in investment interest.

Student housing is a form of real estate. Thus, investing in student housing falls under the umbrella of real estate investments. Yet it differs significantly from other types of real estate.

Before continuing, let’s draw a distinction by answering the question, is investing in student housing seen as a residential or commercial real estate investment?

Technically, student housing is residential real estate, as students reside in them. However, such properties are often considered commercial properties because they offer income opportunities much like hotels do.

The 9 Top Ways to Start Investing in Real Estate for Students

Are you ready to discover how to invest in real estate investment opportunities in the student housing market?

Buying and managing properties to be used for student housing is a direct way to do this. Of course, you don’t have to choose such direct real estate investments. There are various indirect real estate investments, too. Your choice will depend on your budget, investment know-how, and financial acumen.

Regardless of your financial status or comfort level with investing, one of these nine will suit your needs.

1. Buy Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts (REITs) allow investment in real estate without purchasing any physical real estate. So, if you’re wondering how to invest in real estate without buying property, this may be the right option for you.

Many REITs perform as well as traditional mutual funds. They provide passive income and also offer various tax advantages, although they may be subject to capital gains tax when sold. They pay their shareholders through dividends and can offer a higher yield than other investment products.

REITs are a popular choice in the world of real estate investment. However, speak to your financial advisor first if you are new to investing or unfamiliar with REITs. All forms of investment carry with them some inherent risk.

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2. Use an Online Real Estate Investing Platform

Investing in real estate can be daunting for the beginner investor. This is why online investing platforms have risen in popularity. You don’t have to be a master of investment strategy when you use the right online platform for your student housing investments.

Take the time to do some research and find a reputable real estate investing platform. Some online real estate platforms offer their own investment opportunities, even in the student housing sector.

Today’s online real estate investment platforms are typically user-friendly and highly automated. With just a few clicks, you can find the right student housing investment opportunity for you. These platforms usually let you filter search results according to multiple criteria.

This makes investing in student housing projects so much simpler for new investors.

3. Master the Art of House Flipping

Flipping properties is an exciting way of investing in the property market. House flipping involves buying undervalued properties cheaply (they often need renovations and repairs), fixing them up, and selling them for a profit. It can even be a lot of fun taking a property from disrepair to rent-ready.

There is room for this type of real estate investment in the student housing market too. For example, you could renovate multi-unit properties, converting them into suitable student housing before selling them. This lets you profit from student housing without actually having to manage any student rentals.

That said, you could accrue high expenses. Renovations can be costly. You’ll also need to acquaint yourself with the things students look for in student housing. Our guide to real estate housing market trends in student accommodation will help you understand this better.

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4. Become a Landlord and Rent a Room in Your Home

Do you want to know how to invest in real estate for students almost immediately and at a relatively low cost? Rent out a room in a property that you already own to local students and generate rental income on your own terms.

You may have to adapt the room for a student’s use and renovate or refurbish it. Students will likely want modern furnishings and basic amenities like a study area, access to their own bathroom, cooking facilities, and WIFI.

Fortunately, there are always students looking for affordable accommodation, so you’ll have no problem finding potential candidates if you keep your rental price low. Just be sure to screen rental applicants thoroughly. You may find this easier if you use an agency to screen applicants on your behalf.

The Importance of Supply and Demand in Student Housing Investments

It will be a whole lot easier if you live in a town with a university or college nearby. This means that local demand for student housing could be high. However, you must consider both demand and supply, as this can differ from one region to the next.

Be sure to read our critical insights into real estate housing market trends for student accommodation to learn more about this.

Understanding Your Tax Implications When Renting Out Property

Please note that this is still viewed as taxable income, although some of your expenses will qualify as tax deductions. We recommend that you familiarize yourself with any pertinent state and federal guidelines for renting out property before proceeding.

Note: In the US, you must report additional income streams to the IRS, including rental income from a room on your residential property.

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5. Join Real Estate Investment Groups (REIGs)

If you want to learn how to invest in real estate from the experts, join a Real Estate Investment Group (REIG). REIG groups have the real estate investment knowledge and experience that you can rely on. Some may even specialize in commercial properties like purpose-built student housing buildings.

REIGs are essentially groups of private investors whose businesses focus on investing in real estate. They pool their resources to buy, renovate, develop, sell, or finance real estate, including student housing real estate projects.

By joining them, you will have access to a variety of real estate investment opportunities.

6. Buy a House as Your First Real Estate Investment

Buying property is usually a good investment, as most property values tend to appreciate with time. This means you may be able to sell your investment property for a handsome profit in the future. And if the property is well maintained and in a high rental yield area, you can charge a higher rental.

This will allow you to cover your monthly mortgage payments and your mortgage interest, if applicable, and still make a respectable profit.

When to Use a Property Manager

If you purchase property to divide into student rental units, things can get a bit more complicated than renting out to only one or two tenants. Fortunately, you can avoid a lot of the admin by enlisting a property management company to manage the day-to-day, like property maintenance, for you.

Of course, you will have to pay the property manager or property management company a fee. However, this is certainly a worthwhile expense. Property managers will handle the running of your student rental properties so you can enjoy the benefits without the hassles.

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7. Invest in Real Estate Using Mutual Funds

Real Estate Mutual Funds are managed funds that invest in real estate companies’ financial securities. They pool investors’ contributions to purchase REITs or real-estate-centered stocks and bonds. Therefore, mutual funds offer a fair amount of portfolio diversification.

Mutual funds are actively managed, with fund managers deciding how to allocate assets. In our experience, novice investors may be more confident about investing when funds are actively managed by experts in the field.

8. Invest in Real Estate ETFs

Real Estate Exchange Traded Funds (ETFs) invest primarily in real estate-related assets like property management firms, property developers, and REITs. They allow you to invest in real estate companies, globally and usually track specific market indexes.

ETFs are generally passively managed, although not exclusively so. If you are unsure about how to invest in real estate ETFs in the student housing market, speak to your financial advisor.

9. Contribute to Real Estate Investment Through Crowdlending

There is yet another way to invest in real estate without buying property yourself. Often, only a minimal financial contribution is required.

Student housing properties sometimes feature on real estate crowdfunding (also known as crowdlending) platforms. In debt-based crowdfunding, real estate investors receive repayments once the property is bought and rented out.

Many people want to learn how to invest in real estate yet are hesitant because of the potential cost. Real estate crowdfunding allows investors to contribute as part of a group, whose pooled real estate funds are then used to buy property.

A guide on investing in real estate, featuring tips, strategies, and key steps for successful property investment.

How Much Money Do You Need to Invest in Real Estate?

It’s not enough to know how to invest in real estate in student housing. You also need to know how much to invest to get the returns that you’re hoping for.

Several factors can influence this cost, such as your chosen investment type and the platform you select. However, here are a few examples of the average cost to invest in real estate, in general. Remember that the type of real estate you choose may also dramatically affect the costs you’ll face.

REITs can set you back upwards of $1,000, and even as much as $25,000. With REIGs, you could be looking at a cost of about $5,000 to as much as $50,000. Investing in rental properties may cost you $100,000 or more.

That said, there are many opportunities for investing in real estate in the student housing sector, and some are quite affordable.

The key to understanding student housing investment opportunities lies in the market’s dynamics and trends. Try to make your decisions based on the latest student property real estate market metrics. Take a look at our December 2024 snapshot for the national average rent per bed in student housing.

Conclusion

If you’re researching how to invest in real estate, any of these nine strategies is a great start. However, the most successful student housing investments are based on real estate market insights from accurate data. That’s where College House can help.

We offer advanced data analytics for the student housing industry, ideal for anyone interested in investing in, developing, or managing properties for students. With our help, you can make more informed decisions and get the most from your student housing investments.

Contact us today for more information or book a demo.