Student Housing Investing: How to Profit from Properties Near Universities

There are roughly 20 million students enrolled in U.S. colleges and universities. Most schools can house only 20-40% of their student body on campus. That gap between demand and supply creates a reliable, recurring investment opportunity for real estate investors.

Student housing properties near major universities consistently deliver 8-12% cash-on-cash returns. The tenant pool replenishes every year. And unlike many real estate niches, student housing held up well during economic downturns — enrollment actually increased during the 2008 recession and stayed strong through the pandemic recovery.

Here's how to invest in this niche intelligently.

Why Student Housing Works as an Investment

Built-In Demand That Doesn't Disappear

Universities don't close. A school that's been operating for 50+ years will almost certainly be operating 50 years from now. That anchored demand makes student housing one of the most predictable rental niches in real estate.

Key demand drivers:

• Enrollment growth — U.S. college enrollment is projected to remain above 19 million through 2030
• Housing shortages — universities have underbuilt dorms for decades. Many schools have multi-year waitlists for on-campus housing.
• Lifestyle preferences — upperclassmen and graduate students overwhelmingly prefer off-campus living
• International students — over 1 million international students study in the U.S., and most need off-campus housing after freshman year

Per-Bed Revenue Model

The single biggest financial advantage of student housing: you rent by the bedroom, not by the unit. A 4-bedroom house that might rent for $2,000/month to a family can generate $600-800 per bedroom ($2,400-3,200/month) when rented to students individually.

This per-bed pricing model increases gross revenue by 20-60% compared to traditional single-family rentals in the same market.

Parental Guarantees

Most student leases include a parental co-signer or guarantor. This means your effective tenant has a household income of $80,000-150,000+, even though the student themselves may have minimal income. Collection rates on guaranteed student leases consistently exceed 97%.

Choosing the Right University Market

Not all college towns are equal. Here's what separates great student housing markets from mediocre ones:

Tier 1: Large State Universities (Best for Investors)

Schools with 25,000+ students, strong enrollment trends, and limited on-campus housing offer the deepest tenant pools. Examples:

• University of Texas at Austin (52,000+ students)
• Penn State University Park (47,000+ students)
• University of Florida (55,000+ students)
• Ohio State University (61,000+ students)
• University of Georgia (40,000+ students)
• Arizona State University (77,000+ students)

These markets have high, consistent demand and enough transaction volume to establish reliable property values.

Tier 2: Mid-Size Universities with Strong Brands

Schools with 15,000-25,000 students and strong alumni networks. Often in smaller towns where the university dominates the local economy:

• University of Alabama (38,000 students)
• Clemson University (27,000 students)
• University of Mississippi (24,000 students)
• James Madison University (22,000 students)
• Boise State University (28,000 students)

Markets to Approach Cautiously

• Schools with declining enrollment — check 5-year enrollment trends before investing
• Small private colleges — vulnerable to closures and enrollment drops. Over 100 small colleges have closed or merged since 2016.
• Schools building massive new dorm projects — this can shift demand away from off-campus housing temporarily
• Universities in expensive metro areas — property prices in Boston, NYC, or LA near campuses may not pencil out for cash flow

What to Research

• On-campus housing capacity vs. total enrollment — the wider this gap, the better
• University master plans — check if the school plans to build more dorms
• Off-campus rental vacancy rates — below 5% is healthy; below 3% is excellent
• Local rent trends — has per-bed rent grown over the past 5 years?
• Town-gown relationship — some cities restrict rental density near campus. Check zoning.

Property Types and What Works Best

Single-Family Homes (3-5 Bedrooms)

The most common entry point. Buy a house within walking distance or a short bike ride to campus, renovate with durability in mind, and rent by the bedroom.

Pros: Easier to finance, simpler to manage, strong resale market Cons: Lower unit count limits scale

Duplexes and Triplexes

Multiply your bed count while keeping a single address. A duplex with 3 bedrooms per side gives you 6 rental beds from one property.

Pros: Better per-door economics, house-hack potential (live in one side) Cons: Slightly more complex management

Small Apartment Buildings (5-20 Units)

For investors ready to scale. These require commercial financing but offer the best economies of scale.

Pros: Professional management makes sense at this size, highest cash flow potential Cons: Higher capital requirements, commercial loan terms

Condos Near Campus

Can work in specific markets but watch for HOA restrictions on rentals and rising HOA fees that erode returns.

Financial Analysis for Student Housing

Revenue Calculation

Use per-bed pricing. Research what comparable bedrooms rent for near your target campus:

• Shared room (2 students per room): $400-600/bed/month
• Private bedroom, shared bath: $600-900/bed/month
• Private bedroom, private bath: $800-1,200/bed/month
• Master suite or premium room: $900-1,400/bed/month

Example: A 5-bedroom house near University of Georgia

• 5 bedrooms × $750/bed/month = $3,750/month
• Annual gross: $45,000
• If same house rents to a family: ~$2,200/month ($26,400/year)
• Student housing premium: 70% more revenue

Expense Considerations Unique to Student Housing

• Higher turnover costs — expect annual turnover. Budget $200-400 per bedroom for turn cleaning, painting, and minor repairs each summer.
• Increased maintenance — students are harder on properties than families. Budget 8-10% of gross rent for maintenance vs. the typical 5-7%.
• Furnished vs. unfurnished — furnished units command $50-100/bed more per month but require upfront investment ($2,000-3,000 per bedroom) and periodic replacement.
• Utilities — many student rentals include utilities in rent. Budget $100-150/bed/month for utilities if you're including them. Consider RUBS (ratio utility billing) to pass costs through.
• Summer vacancy — some markets see 10-30% vacancy in summer. Mitigate by offering 12-month leases (standard practice) or targeting summer school students and interns.

Sample Deal

A 4-bedroom, 2-bathroom house near Clemson University:

• Purchase price: $280,000
• Down payment (20%): $56,000
• Closing costs: $6,500
• [Renovation](/blog/bathroom-renovation-cost-guide) and furnishing: $18,000
• Total cash invested: $80,500
• Monthly rent: 4 beds × $700 = $2,800
• Annual gross revenue: $33,600
• [Operating expenses](/blog/net-operating-income-guide) (45%): $15,120
• NOI: $18,480
• Annual debt service (6.75% on $224,000): $17,424
• Annual cash flow: $1,056
• Cash-on-cash return (Year 1): 1.3%

That looks thin — but here's the reality. Per-bed rents near Clemson have increased 4-6% annually. By year 3, you're looking at $3,100+/month in rent with the same fixed mortgage, pushing cash-on-cash above 8%. Plus you're getting principal paydown (~$4,800/year) and appreciation.

Renovation and Property Prep

Durability Over Luxury

Student housing renovation priorities:

1. LVP flooring — luxury vinyl plank handles abuse, water, and easy cleaning. Never install carpet in student housing.
2. Solid-surface countertops — quartz or granite. Laminate gets destroyed.
3. Commercial-grade paint — use satin or semi-gloss finish for easy cleaning. Budget for repainting common areas annually.
4. Heavy-duty fixtures — commercial-grade faucets, lever handles, solid-core doors
5. Individual bedroom locks — keyed or electronic locks on each bedroom door are expected in per-bed rentals
6. Adequate bathrooms — at least 1 bathroom per 2 bedrooms. A 5-bed house with 1 bathroom won't rent well.
7. In-unit laundry — a washer/dryer adds $50-75/bed/month in rent and is a top amenity for students
8. High-speed internet — provide at least a basic internet connection. Students consider this as essential as running water.

Maximizing Bed Count

Adding bedrooms is the fastest way to increase revenue:

• Convert a formal dining room into a bedroom (must have a closet and window for egress)
• Finish a basement and add a bedroom (check local building codes)
• Convert a garage into living space (permits required, varies by city)
• Add a bedroom during renovation if square footage allows

Every additional bedroom you create represents $7,000-12,000 in annual revenue.

Lease Structure and Management

Lease Best Practices

• Individual leases per bed — never put all students on one lease. If one student breaks the lease, the others still pay. This is the industry standard.
• 12-month lease terms — August to July, aligned with the academic year. This eliminates summer vacancy risk.
• Parental guarantor requirement — require a co-signer with verifiable income for every tenant
• Security deposit per tenant — one month's per-bed rent, held separately
• Clear house rules — noise policies, guest policies, parking assignments, maintenance request procedures

Management Options

Self-manage (1-5 properties): Student housing is more management-intensive than traditional rentals due to annual turnover and higher maintenance needs. But it's predictable — you know exactly when tenants move in and out.

Key tasks: marketing (start in February-March for August move-in), showing units, lease signing, move-in/move-out inspections, maintenance coordination, rent collection.

[Property management](/blog/property-management-complete-guide) (5+ properties or remote investing): Student housing managers typically charge 8-12% of gross rent. Some specialize exclusively in student housing near specific campuses — these specialists are worth the premium.

Tenant Marketing

Student tenants search differently than traditional renters:

• University housing boards and off-campus housing portals
• Facebook groups for the specific university
• Instagram and TikTok — seriously, Gen Z finds housing on social media
• Word of mouth — happy tenants refer friends. Offer a $100-200 referral bonus.
• Zillow, Apartments.com, Rent.com — list everywhere

Start marketing in January-February for August move-in. The best tenants lease early. If you're still marketing in June, you're behind.

Risks and How to Mitigate Them

Enrollment Decline

Risk: A university loses students, reducing demand. Mitigation: Invest near Tier 1 schools with stable or growing enrollment. Diversify across 2-3 university markets. Avoid schools dependent on a single program or demographic.

Regulatory Changes

Risk: City passes ordinances restricting rental density near campus. Mitigation: Research the political climate before investing. Attend city council meetings. Join the local landlord association. Properties that are already permitted as rentals are typically grandfathered in.

Property Damage

Risk: Students cause above-average wear and tear. Mitigation: Collect adequate security deposits. Document property condition at move-in with photos and video. Use durable materials. Budget 10% of gross rent for maintenance. Require renters insurance.

Concentration Risk

Risk: All your income depends on one university's fortunes. Mitigation: Diversify across campuses. Consider properties that could also rent to young professionals or families if the student market shifts.

Tax Benefits of Student Housing

Student housing investments qualify for the same tax benefits as other rental properties, plus some specific advantages:

• Depreciation — residential rental property depreciates over 27.5 years
• Cost segregation — accelerate depreciation on furnishings, appliances, and certain building components
• Furnished rental deductions — furniture, appliances, and decor are depreciable over 5-7 years
• Travel expenses — trips to the property for management purposes are deductible
• [1031 exchange](/blog/1031-exchange-guide) eligibility — trade student housing for other [investment property tax](/blog/selling-rental-property-guide)-free

Frequently Asked Questions

Is student housing a good investment for beginners?

Yes, it's one of the more beginner-friendly niches. The tenant pool is predictable, lease cycles are consistent, and the properties (typically single-family homes) are easy to finance. Start with one 3-4 bedroom house near a large state university with growing enrollment.

How do I handle roommate conflicts?

Individual leases are your best protection — each tenant is responsible for their own rent regardless of interpersonal issues. For conflict resolution, provide clear house rules in the lease and a process for submitting complaints. Don't get involved in personal disputes unless they involve [lease violations](/blog/dealing-with-problem-tenants).

Should I furnish student rental properties?

In most markets, furnished units rent faster and for more money. Budget $2,000-3,000 per bedroom for basic furniture (bed frame, mattress, desk, chair, dresser). Use durable, easy-to-clean pieces. IKEA's commercial line and Amazon Basics work well. Replace pieces as needed during summer turns.

What happens during summer break?

If you use 12-month leases (recommended), students pay rent through summer whether they're physically present or not. Some students sublease to summer school students or interns. Your lease should address subletting policies. In markets with weak summer demand, consider offering a reduced summer rate built into the annual lease price.

How far from campus should I buy?

Within 1 mile of campus is ideal — walkable or bikeable distance. Properties within a 5-minute walk command the highest per-bed rents. Beyond 2 miles, demand drops significantly unless the property is on a bus route or near a popular off-campus area with restaurants and nightlife.

Can I use an FHA loan to buy student housing?

Yes, if you live in one unit. Buy a duplex, triplex, or fourplex near campus with an FHA loan (3.5% down), live in one unit, and rent the other bedrooms to students. This is one of the best house-hacking strategies for young investors — your tenants essentially pay your mortgage while you build equity.

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