Following are several strategic tips for investors when considering where to invest in student housing.
• The most important factor in determining a favorable climate for a student housing investment is the ratio of university-owned beds to the total number of enrolled students. The logic is simple: The lower the ratio of beds to students, the greater the need for private-sector student housing.
• Examine the student housing living policy of the school under consideration and make universities that allow students to live off-campus as early as their sophomore year a priority. Some schools limit off-campus housing privileges to upperclassmen or married students.
• The first investment in a local college town is critical because owners and brokers generally find investors to be more credible once they have successfully completed a transaction of any size in their towns. Often the first question sellers and local student housing brokers ask is, “Do you own any other properties near the local campus?”
• Joining a local apartment owners association is a critical first step for entrepreneurs hoping to establish local name recognition and gain access to peers. Reaching out to others and maintaining strong relationships in individual markets might not pay off immediately, but by doing so, these owners will be contacted when possible opportunities become available.
Source: Michael H. Zaransky, Co-CEO of Prime Property Investors, is author of Profit By Investing in Student Housing and is a panelist at NAA’s 2010 Student Housing Conference, Feb. 22-23, in Las Vegas.