-Short-Term Rentals: A $5.7 Billion Opportunity in Student Housing

The student housing market attracted $5.7 billion in investments in 2023 and is projected to continue its upward trajectory for the foreseeable future. Short-term rental properties, in particular, have emerged as a growing investment opportunity for property managers and real estate investors.

Students rely on short-term leases with flexibility as the core tenants, increasingly looking for accommodation that can align with ever-changing academic schedules.

From entire homes to individual rooms, short-term rentals are an ideal solution for meeting the fluctuating demand of the modern student.

What Is Considered a Short-Term Rental in Each State?

Short-term rentals are properties rented out for short periods, ranging from a few days to less than a year. The exact definition differs depending on your local government, mostly because of zoning laws and temporary housing regulations.

For example, a short-term rental in New York is anything less than 90 days. In California, it is less than 30 days.

To determine your state and local laws regarding short-term rental leasing cycles, visit your state website. Or, search “[Your state] short-term rental period.” These laws are amended and updated semi-regularly, so we suggest signing up for your local or state real estate newsletters to stay updated.

What Are the Different Types of Short-Term Student Rentals?

There are different types of short-term student rentals, and what type you offer can influence your rental agreement. Our research shows these are the top 5 types of short-term rental property.

Shared Apartments

Shared, short-term apartment rentals are a popular option. Shared apartments tend to be more affordable and offer students the privacy they wouldn’t get with traditional student housing.

They have their own bedrooms while sharing community spaces like kitchens, bathrooms, and backyards.

Studio Apartments

Studio apartments are another popular option. These short-term apartment rentals appeal to students who prioritize their privacy over all else.

Studio apartments offer compact, self-contained living spaces and are ideal for short-term leases during internships, semester breaks, and summer sessions.

Sublet Rentals

Sublet rentals let students rent properties while the primary residents are away. The renters make money from their homes while they’re away, and students gain access to fully furnished homes.

Sublet rentals also encompass accessory dwellings, like a garage apartment. These accessory dwellings are a cost-effective way for students to enjoy short-term housing and some privacy.

Dormitory-Style Housing

Dormitory-style housing allows students to enjoy structured, communal living. While dormitory housing is usually associated with long-term rentals, many universities, and private owners are providing short-term rentals for students who need short-term options but don’t want to pay for vacation rentals.

This type of housing is ideal for students attending summer programs, exchange semesters, and university workshops.

Corporate Housing

Corporate housing isn’t just for business travelers anymore. It’s recently gained popularity among students, offering flexibility, convenience, and affordability. It’s worth keeping an eye on, especially in the new year, as student housing trends change.

How Short-Term Rentals Work

Short-term rentals appeal to transients looking for affordable accommodation, convenience, safety, and community.

Property managers share listings online, either on dedicated student housing portals, social media, or alongside other vacation rentals on platforms like Airbnb. Students can easily browse different short-term rentals and compare prices and locations.

Because these short-term rentals are all about convenience, students will look for fully furnished locations that include utilities. Booking systems also need to streamline the short-term leasing process. The easier it is, the better.

Long-Term Rentals vs. Short-Term Rentals for Students

For decades, long-term rentals have been the go-to option for student housing. While long-term housing is still very popular and convenient, short-term rentals appeal to distinct groups of students: those in need of flexible accommodation options.

These include students pursuing internships, completing summer workshops, or studying abroad.

While long-term rentals have lower turnover and more predictable revenue, short-term rentals are also lucrative if your area sees a lot of the above types of students.

For property managers interested in short-term rentals, make sure to weigh the pros and cons and student supply and demand in your area. Ideally, your portfolio should contain a healthy mix of long-term and short-term rentals.

Factors to Consider Before Investing in Short-Term Rentals

Before you commit to any short-term property, consider the following elements to ensure you invest in only the best:

• Location: Locations close to colleges, universities, and transportation hubs are especially appealing to students.
• Demand: Seasonal demand fluctuates widely, so it's important to consider the local academic calendar and enrollment pattern to ensure occupancy throughout the year.
• Costs: Furnishings, utilities, and maintenance tend to be higher in short-term rentals. Consider these expenses when considering any investment opportunity.
• Analytics: Data is your friend and will help you determine the best investments for your portfolio. Platforms like College House provide valuable insights into the student housing market, which can help you identify lucrative short-term housing options.

How Are Short-Term Rentals Regulated?

Short-term rentals are subject to local, state, and federal regulations, which can be overwhelming if you don’t know where to start. Zoning laws, permit requirements, and taxes vary widely across local governments.

Housing near universities also sometimes has additional regulations on long-term rentals to prevent housing shortages for locals.

If you want to understand your unique location regulations, check local and state government websites. They’ll outline what permits you need and what regulations you need to follow. Always be as specific as possible with your location.

Conclusion

Short-term rentals are a growing opportunity for property managers and investors. They offer flexible and convenient housing that suits the changing needs of modern students.

To make the most of your short-term rentals (and to check whether they’re the right option in your suggested location), make sure you understand local regulations, property types, and market demands.

Ready to choose the best investment option? Visit College House for actionable insights into occupancy trends and market performance. We’ll help you make informed decisions in the incredibly competitive college housing market. Book a demo today!