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Student housing is an exciting asset class that has proven to be a recession-resilient and stable investment opportunity. Even amidst the covid-19 pandemic, this asset class remained relatively profitable. Investing in properties developed and managed by companies that are well-established and renowned, such as Nelson Partners, has particularly proven to be a smart decision. However, one also needs to keep in mind the importance of investing in a diversified portfolio vs. a single asset while trying to explore options for investing in student housing.
Investing in a concentrated portfolio depends on the performance of a single asset to bring returns to the pockets of the investors. While on the other hand, choosing to spread investments across multiple assets facilitates the development of additional opportunities for positive returns while reducing the risks involved. This contributes to the stabilization of overall results. A savvy student housing investor can, for instance, invest in a few stable properties with renowned operators while also taking a risk on newer properties that are located in high-demand regions. By opting to invest in multiple student housing properties, the overall investment shall end up balancing out, even if one or two assets end up facing hardships. On the whole, spreading out student housing investment is just a smart way to enjoy the desired returns.
Universities and colleges are often the heartbeats of the towns and neighborhoods they are located in. The high demand for student housing in these neighborhoods automatically implies to higher rents. Once a student chooses to spend four to five years pursuing a particular degree, they obviously have to select a place to live in. Most of the students do not have the option of commuting from home or living on campus for all four years. That leads to the creation of a captive market. Most of the college students additionally live with multiple roommates. When multiple individuals share a space, the landlords can actually charge higher rents as each of them will pay their share separately. However, if that same space is rented out to the family, obviously all of its members won’t be charged separately.
As a landlord, one may even get cosigners to sign the lease agreement alongside student tenants who have a quite little credit history. By putting a parent or guardian legally on the hook, they will increase their chances of receiving the rent in full. Seeking out the assistance of property management companies like Nelson Partners that specialize in student housing especially helps in ensuring that people get their rent in time.
As a traditional landlord and investor in student housing, one much remember that they are in the business of hospitality, in a certain way. A student housing property needs to be reasonably priced to achieve a high rate of occupancy. If one cannot handle the property management, they can always get a professional or company to help them with it.
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