Student Housing Investments

Student Housing InvestmentsWhen you think of student housing, do memories of cramped rooms, poorly maintained apartments or “animal house” style parties cloud your mind? It did so for me until discovering a new era in student living. Things have sure changed over the past decade from years past. The quality of living conditions, amenities and services provided to today’s students are a vast improvement over the experiences of previous generations. Echo boomers and their parents demand many of the creature comforts and luxuries that they have grown up with.

Student Housing InvestmentsIn recent years, student housing has become its own niche in commercial real estate, earning the distinction of being one of the safest forms of commercial investing. If you think about, it is unlikely that parents will remove their children from schools in a poor economy. In fact, recessions generally increase student populations. We also believe that larger public schools provide better opportunities, since their economics have a broader appeal in any economic cycle. Most parents understand and accept that they will be asked to cosign on leases, which is an extra layer of protection for owners. These factors help to make student-housing a relatively safe long-term investment.

What makes a great student-housing project? Like all other real estate, student-housing values are significantly influenced by their location (ie proximity to the campus and other amenities). The best projects offer private bathrooms, attractive kitchens, open-spaces to meet and congregate, hi-speed Internet service, state-of-the-art security and most importantly a short walk to classes. Investors who provide these qualities to students will be protected by over-development and other risks of the market.

At Bridge Equity Group, we are currently partnered with a team that is offering exceptional opportunities in an emerging urban school market. These investments produce exceptional cash flow and significant upside potential. Our investors can choose to purchase existing buildings that are currently generating substantial revenue streams or consider new development opportunities that offer the same or better returns plus great long-term upside possibilities.

We are always on the hunt for other student housing markets that make financial sense. It is a specialized field, and selecting the right on-site partner for long-term success is critical. Our criteria for a great student-housing market includes: 1) Increasing student population. 2) High ratio of off-campus vs on-campus housing 3) High ratio of non-commuter students 4) Relatively low housing costs vs rents. 5) Close proximity to campus (within 1 mile or less). 6) High barrier to entry (new developers). 6) Local market supporting rental contracts by the unit or bedroom. We have found these factors to be the key indicators for a successful student-housing project and are continually seeking out such markets

If you are interested in learning more about such investment opportunities, do not hesitate to contact us here.

Frequently Asked Questions

Do Student tenants cause a lot of damage to rental properties?

In general, students are not anymore destructive than the average tenant.  But, to insure they treat our properties with care, we give them a list at move-in of the fines and repair costs we’ll collect in the event of damage.  We also have two guarantors (usually parents) for each lease.

Do you inspect the units regularly?

There are usually reasons we need to go into each unit regularly – to answer service requests or make repairs. So we have a chance to catch any developing problems and get regular feedback from the residents.

How do you collect fines from money challenged students?

Every student tenant in our properties has a parent guarantor whom we screen as carefully as tenants who are actually going to live at the property. In addition, all tenants sharing an apartment are individually and severally responsible for any fines or repair costs. That means we are legally entitled to collect money (fines and even rent) from any of the tenants individually on behalf of the entire group.  Then it is up to that person to get everyone to pay him/her back.

The school year is only 9 months - don’t you lose the other 3 months’ income every year?

All of our leases are for a full 12 months and begin and end during a summer month. The tenants pay conscientiously so they are sure to have their school year housing when school starts.

Is it hard to find new tenants if the current tenants wait until the end of the school year to tell you they’re not renewing?

All of our leases state the students have to give a full 6 months’ notice of their intent to stay or move, so we have plenty of time to advertise units that will be vacated.

Do the students ever not show up to move in after signing a lease?

No – they pay at the signing of the lease, a full months’ rent as a security deposit, plus the first and last month’s rents.