What does it mean to invest in student housing, and how will you know if it’s the right investment choice for you? The student housing market presents investors, even true beginners, with multiple profitable avenues related to student properties. However, investing in student housing properties can mean many things.
To take advantage of this promising market, you need a real estate strategy that respects your financial situation, interests, and skills. We’ve examined 7 exciting ways that you can start investing in student properties.
Investing in student housing allows you to make a profit or even earn a regular income from student accommodation properties.
There are different ways to do this. You can invest in real estate directly by building or buying a property to rent out as student accommodation. Or you can invest indirectly, by buying shares in student housing projects.
The properties themselves can differ widely, too. They can be dormitories, self-sustaining units, or shared properties. They may be purpose-built for students ready to lease or in the process of development or refurbishment.
The real estate investment strategy you choose depends on your experience, investing skills, and what you can afford to invest in time and money.
There are two ways you can invest in real estate: directly or indirectly.
Direct real estate investment requires purchasing physical property or land to build property on. Direct real estate investments offer investors more control over their investment decisions and potentially higher returns.
Indirect real estate investment involves buying shares in real estate mutual funds, REIGs, REITs, etc. Indirect real estate investments allow investors to profit from real estate without all the hassle of sourcing and buying properties. It’s also a more affordable option than buying property.
Many people desire to profit from the high demand for student housing, but are hesitant because they lack investing expertise.
And yet, the truth is there are many ways to invest in student housing. With the right strategy, knowledge of investing is not always necessary. This makes student housing investment attractive to all types of investors.
Investing in student accommodations offers benefits that other types of real estate investment don’t.
A real estate investing strategy doesn’t have to be complicated. Here are seven simple ways to invest in the student housing market.
If you own a functional property that you can rent out, make a few small changes to equip it for students. You’ll start benefiting from student rentals in next to no time. You can also buy a property to rent it to students.
Leasing to full-time students rather than part-time or short-course students will reduce tenant turnover. That said, short-term rentals often have higher rental rates. Our article about understanding college enrollment will help you decide which student tenant option offers you the most benefits.
A real estate investment group (REIG) is a managed investment group that pools real estate investors’ resources to buy and rent out properties. Investors then receive a share of the profits from that rental income.
When REIGs source real estate assets, they often focus on a specific property type, such as residential or commercial real estate.
But you won’t struggle to find a REIT that includes student properties in its portfolio because student housing falls into both of these categories. Student accommodations provide housing but are also income-generating properties.
To learn more about this real estate investment strategy, read our guide to REIGs and how they work in student housing.
House flipping is a real estate strategy that involves buying a property (usually a bit of a “fixer-upper”) cheaply and reselling it for a much higher price. In the context of student housing investment, you could repurpose the property as student accommodation and sell it as such.
Properties sold cheaply often require extensive renovation and refurbishment, and you will need enough money to cover expenses until you sell the property. The longer it takes to sell the property, the longer you’ll wait to recoup your costs.
This is why house flipping is not a very common student housing investing strategy. But if you have the time, the money, and some expertise in renovation, this strategy may work for you. House flipping can also revitalize neighborhoods, improving local property values.
A real estate investment trust (REIT) is a company that owns real estate to generate rental income from it. There are different types of REITs, dealing with a diverse range of properties, including student housing properties.
By investing in a REIT, you invest in real estate without buying property yourself. Most REITs are publicly traded. They are also highly regulated and legally required to pay out 90% of their taxable income to investors.
Do you think a student real estate investment trust might be the right real estate strategy for you? Find out more with our tips for investing in student REITS.
You don’t have to do any house hunting or renovation, or know how the stock exchange works, for this real estate strategy.
Visit an online real estate platform that facilitates debt-based crowdfunding. Some of these crowdfunding projects are dedicated to purpose-built student accommodation. As an investor, your contributions will be pooled with others to fund real estate construction and development projects.
By investing in these real estate projects, you can earn a consistent income from interest-bearing loan repayments. You may also receive a percentage of rent payments. Take note that this will only happen once the properties are complete and students have taken up residence.
House hacking is an old real estate strategy that’s been rebranded, and it’s gaining a lot of renewed attention. It involves making money from your home without having to sell it.
There are different ways to do this. You could rent a room in your home to a student. Or, you could rent out the entire home to two or three students while you live and work abroad or go on an extended vacation. (See it as house-sitting, but where you get paid).
If you don’t like the idea of sharing your living space and want to continue to live in your home, there’s another option. Convert an unused garage or build an accessory dwelling unit and rent it to students.
We recommend you contact your city’s planning office and check your local zoning codes first. Building additional dwelling units is not allowed everywhere, and there are rules you’ll have to follow even when it is allowed.
A real estate investment strategy that’s been getting a lot of attention recently is known as the BRRRR method. BRRRR stands for five stages: Buy, Rehab, Rent, Refinance, and Repeat.
To use this method for student housing investment, you would do the following:
There are several ways to invest in student properties, and with the right strategy, you could reap great rewards. That said, even the best real estate investment strategy must be built on accurate data and expert insights. Fortunately, you get both at College House.
Our experience with data and intelligence for the student housing market makes us the ideal choice for comprehensive data analytics. We also offer real estate market reports, insights, and tips for people wanting to invest in, develop, or manage student properties.
Book your demo today and see our data in action.
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