Memphis, like most major metropolitan area, has several Colleges. From the University of Memphis to Rhodes College and all the small colleges in between. Memphis is no stranger to the college age kids. With that age group comes an opportunity for money to be made. There are some distinct advantages and disadvantages to investing near universities.
Lively Hip Neighborhood
Colleges are full of young people and tend to be highly populated. This energetic young crowd often attracts many amenities and accommodations, including restaurants, gyms, stores, entertainment, and even businesses. These features instantly make your near-campus housing even more attractive—regardless of whether the tenants will be students attending the university. They also make your investment more secure since they’ll offer more opportunities for the tenants opting to move in.
For example, near the University of Memphis, a revival has happened on the road Highland. Years ago, there were ver
y few business on Highland. It seemed like they were closing faster than they were opening. Then about 2 years ago, money was put into this area and now it is booming. There are multiple restaurants and bars that have opened and new ones open all the time. They have put up an apartment complex and have really increased the property value in that area. This is the ideal situation as business move in it helps the investment and causes more people to want to rent in that
area, thus allowing for a higher rental rate and rent. A win for our area and the rental market near the U of M.
Large Pool of Tenants
Because Universities are constantly attracting thousands of new students, it stands to reason that there would be a very large pool of prospective tenants from whom to rent your property to. These students often temporarily inflate the existing population of the city, potentially doubling or even tri
ling the sheer number of potential renters you could accommodate.
Climbing Stable Rents
Rent Prices near colleges and universities have always been stable and growing over the past few years. Especially If the university is open and thriving then it would allow rent prices to climb year over year. You won’t have to worry about any volatility in the surrounding market because Students will always need a place to stay and will look towards rental property since they are unlikely to be ready to buy their own home while in college because they often don’t know where they plan to end up after graduation.
Some students will stay all year round, but most will return home during the summer or when classes aren’t in session. This leads to a dearth in rentals during the summer. The other thing you must consider is that it is possible to have students who will move every year. So, it is possible you would see a higher tenant turnover year over year and will not have any long-term tenants.
With the student demographic, there is a concern when it comes to property damage. Students tend to be more energetic, with loads of free time on their hand and that leads to parties and reckless behavior. Finding the perfect tenant, who is respectful of your property is very important. These items should be addressed in any pre-rental interviews.
Near-college real estate offers many perks, but it isn’t a perfect location—there’s no such thing. As long as you’re aware of the potential disadvantages and can compensate for them with your choice in property, purchase price, rent prices, and ongoing management, you can likely find a highly profitable deal in your chosen area. Keep your eyes peeled for a good deal and remember that it takes patience and timing to build wealth through real estate—no matter what kinds of properties you choose.