We traveled back to visit our families Northeast Wisconsin for the holiday season. While we were there, we toured college properties in Oshkosh, Wisconsin. University of Wisconsin-Oshkosh is where my husband attended college so he is very familiar with the market. University of Wisconsin-Oshkosh is a state-funded school known for its nursing and teaching degrees. The school’s student population has remained consistent year after year, making for a steady rental market.
A healthy rental market is a great starting reason to buy in a specific market. But there’s always other factors to consider. Here’s our list of pros and cons of buying, owning, and managing a college rental.
College Populations are Very Stable
This is true in most college areas, especially for state-funded schools. Generally these school campuses are pretty land-locked and running low on student housing. Finding out the school’s student population is very easy. A simple google search of the school will show the student population as well as the amount of on-campus housing. For example, on University of Wisconsin-Oshkosh’s homepage, it lists the student population as 14,000 and lists less than 8 student housing options. For those students that can’t live on campus, they generally want to live within walking distance of the campus. Living in close proximity is convenient and many college campuses lack parking. The closer to campus the rental, the better. We try to stay within a 6 block radius of the campus for maximum walk-ability.
Rentals are Always in Demand
Students need a place to live. Rentals give them a place to live. As long as there are students, the demand for housing will continue. Also, many students book their housing well in advance. This means students looking for the fall semester of 2017 will be signing leases around winter and spring of 2017. It allows for rentals to be booked well into the future and creates low vacancy rates.
Advertising Housing is Easy
Not only do the usual methods of Craigslist and the rental sign in the front yard work, but there’s also student associations to take advantage of to attract renters. Oshkosh has the Oshkosh Student Association (OSA) which posts student housing options for off-campus living. Posting on sites like this are free and make for easy advertisement. RentCollegePads.com is another great free posting site to use to attract college-age renters.
Students don’t need or want Luxury Living
Unlike the young urban professionals who rent our downtown properties in Denver, students aren’t concerned with granite counter tops, exposed brick, and hardwood floors. They are concerned with living in a place they can afford. Students still want a nice, clean place to live, but don’t necessarily have the means to pay for luxury. This is great for the landlord since upgrades won’t be needed and repairs can be done with rental grade materials.
Students will shovel snow, mow the lawn to save money
Again, students are generally budget conscious because they have to be that way. They won’t want to pay extra to have someone else shovel snow or mow their lawn. They’ll do it. In fact, most student leases require students to shovel snow and keep the lawn in shape. The landlord may provide a shovel and cheap lawn mower, but those are one-time costs. Monthly costs for the property owner are kept lower by not having to hire third parties to perform these types of tasks.
Students like to party
I’m not saying all students party hard. But I was in college once and I know the types of parties we threw at our place. The basement had a bar in it and was absolutely disgusting. But we did not care because the basement had blacked out windows and cops couldn’t drive by and see our parties. We cleaned the basement up only when we moved out and it took forever. I imagine this is what happens in a lot of college houses. Expect there to be some wear and tear to your property based on these types of events. Security deposits will generally cover these damages. And be prepared to have a cleaning crew come through when students move out.
Students are poor
College students have limited incomes. I sold plasma for money in college and worked low-paying part-time jobs. This is pretty consistent with most people I know who went to college. Everyone I knew had just enough money for rent, beer, and Ramen noodles. This means that students may have to borrow money to pay rent or worse yet, not be able to pay it. Yes, there is some protection in the lease for not paying rent, but that gets into messy territory, possibly leading to eviction. And no one wants to deal with that.
Appreciation is Not Likely
Student housing isn’t going to be in the next “up and coming” area in any city. Families and young urban professionals don’t want to live in the same neighborhood as students because of the reasons listed above. Since these neighborhoods will remain a student housing area for the life of the college, it’s unlikely housing prices will appreciate much. For example, in Oshkosh, housing prices have remained the same for the past 10 years. The houses we looked at over Christmas break, had remained within $5000 of what they sold for in 2004.
If buying a property for appreciation is on your wishlist, these are not the types of properties to buy. These properties are strictly cash-flow properties. This means, their list price is low enough that rents will easy cover the mortgage plus some extra, generally a couple hundred bucks.
So will we invest in student housing?
That remains to be seen. Stay tuned to see if we do!