As a student moves to another city, state or even country for higher education, finding a suitable accommodation is located close to their college or university and provides certain important amenities, becomes among their primary concern. There is a variety off campus accommodation options available to students today. Investing in such properties additionally has become a popular trend among many savvy investors of today. Considering the growth witnessed in the education sector over the years, one can see a consistent rise in the demand for superior quality accommodation. Investors desiring to leverage the opportunities offered by this sector can always get in touch with companies like Nelson Partners.
Student housing properties can be considered to be a subset of multifamily real-estate. Investing in this sector comes with its very own set of opportunities and challenges. While student housing properties do seem similar to typical multifamily properties, they have multiple key differences, the leasing dynamics being one of the major ones. A key benefit of student housing is that its tenant base is highly visible and consistent. Tenants, in fact, generally opt for a pre-lease prior to the start of the school year, rather than choosing to sign lease on a rolling basis. Such an approach makes cash flow predictable for the landlords. Moreover, student housing leases are almost always provided on a 12-month basis, and hence landlords need not worry about summer vacancies. If the property is well located, it won’t take the landlords to secure new tenants after any school years. As parents are generally the guarantors on the lease, the concerns of delinquencies are also pretty less in student housing properties. While college students do want to live with other students, they are often bothered by the stringent on campus rules. Moreover, many campuses also do not have adequate dormitory space. In case of off campus student housing, purpose build accommodation units to be particular, the entire building caters to this demographic. The demand for such housing projects is becoming increasingly popular.
Savvy student housing operators of today also understand that they may enjoy opportunities to top-line revenue through their properties as well. For instance, many student housing projects today offer:
- Luxury amenities in public areas, which can include study rooms, yoga studios and study rooms
- Furnished living units that appeal to students seeking convenience and high-end housing solutions
Many students today are ready to pay premium rents for properties having facilities like the ones mentioned above. These facilities can often be found in properties developed and managed by companies like Nelson Partners.
According to multiple reports, college enrollment does not appear to be negatively affected by recessions. Hence, student housing is often considered to be “recession-proof.” Student housing is a subset of the multifamily asset class, in which employment prospects drive demand. As long as higher learning and economy doesn’t entirely collapse, young adults shall go or want to college. As a result, student housing is mostly insulated from macroeconomic or market-specific shocks.
