The Pros and Cons of Owning Multifamily Units in College Towns

12 January 2025

Owning multifamily units in college towns isn’t just about finding a steady stream of tenants; it’s like stepping into a whole new world of real estate. On one hand, you’ve got energetic students moving in and out, keeping your property buzzing with life. On the other hand, you may find yourself chasing down rent payments or fixing that one weird problem at 2 a.m. (Oh, college kids—there’s always "something"). Let’s dig into this and lay out the pros and cons to help you decide if this investment is your next big move or a lesson in patience.

The Pros of Owning Multifamily Units in College Towns

1. Consistent Tenant Demand

Picture this: a new wave of students floods in every semester like clockwork. One thing college towns rarely have is a shortage of renters. With young people needing a place to stay during their studies, you're practically guaranteed a steady pool of tenants. In fact, some colleges grow their enrollment year after year, creating even more demand for housing.

Plus, students are usually on a tight budget, which makes multifamily housing more attractive to them because it’s easier to split the cost of rent among roommates. For you, that translates into lower vacancy rates and consistent income. It’s almost like the tenants come pre-packaged with their acceptance letters!

2. Higher Rent Per Unit

Sure, students are frugal, but here’s the kicker: they're willing to pay a premium for convenience. If your property is close to campus, restaurants, or public transportation, you can command a higher rent per unit. Parents are often involved too, and they’re more likely to prioritize safety and location over price.

And let’s not forget furnished apartments. Students love a move-in-ready situation, and including basic furniture in your units allows you to charge even more.

3. Shorter Lease Terms Are an Opportunity

While it sounds like shorter leases (typically for the academic year) might make things messy, it can actually be a blessing in disguise. If you plan it right, the summer months give you an opportunity to make upgrades, deep clean the units, or even adjust the rent higher for the next batch of tenants. Win-win!

4. Roommate-Friendly Layouts Work

Have you noticed how multifamily units often have layouts perfect for roommates? They come with multiple bedrooms, shared common spaces, and bathrooms galore. This type of housing just screams “college living.” Students will happily pile in to save money, making it easier for you to keep the place fully rented.

5. Proximity to Stable Institutions

Colleges and universities don’t just up and leave. They’re like the titans of stability in a community. As long as the school remains, there will always be demand for student housing. This stability is a huge perk if you’re looking for a safe, long-term investment.

The Cons of Owning Multifamily Units in College Towns

1. High Turnover Rates

Let’s be real: students are not permanent tenants. They graduate, transfer, or move on to other housing arrangements almost every year. This constant turnover means more effort on your part to fill vacancies, screen tenants, and handle move-in/move-out logistics. And trust me, it’s a lot of footwork.

It’s like running on a treadmill—you’re always moving, but it feels like you’re in the same place!

2. Wear and Tear on the Property

Here’s a harsh truth: college students might not take the best care of your property. They’re not intentionally destructive, but they’re young, inexperienced renters. Throw in occasional parties, and you might find yourself replacing carpet, patching drywall, and unclogging drains more often than usual.

Maintenance costs can pile up faster than a stack of term papers during finals week, so it’s important to budget accordingly.

3. Noise Complaints and Neighborly Tensions

College students are, well, college students. They’re loud, social, and often unaware of how their lifestyles impact neighbors. If your multifamily property is nestled in a quiet residential area, tensions might arise between your tenants and the local homeowners.

This adds a layer of conflict management to your responsibilities. Unless you’re a natural diplomat (or love awkward conversations), this could become exhausting.

4. Risk of Unpaid Rent

Let’s face it, students aren’t exactly rolling in dough. They rely heavily on part-time jobs, financial aid, or parental support to cover rent. If any of those income sources dry up, you might end up chasing down payments. It’s not uncommon to hear complaints from landlords about late rent or outright defaults in college towns.

To protect yourself, you might need to require a co-signer (like a parent) on the lease. But even that isn’t a foolproof safety net.

5. Seasonal Vacancies

While demand is generally high in college towns, there’s often a lull during summer. Students head home, take internships, or study abroad, leaving empty units behind. You might need to prep for a few months of reduced income unless you can land summer renters like traveling nurses, interns, or summer school students.

How to Make It Work

If you’re still excited about the idea of owning multifamily units in college towns (and hey, why not?), there are some strategies to tip the scale in your favor:

- Screen Tenants Thoroughly: Find responsible student renters and make co-signers a standard requirement to mitigate financial risks.
- Add Amenities: A Wi-Fi-ready apartment or on-site laundry can set you apart from competitors and justify higher rent.
- Budget for Repairs: Be proactive, not reactive. Keep a reserve fund for typical wear and tear costs.
- Understand the Market Cycle: Learn the patterns of move-in/move-out seasons so you can streamline leasing efforts.
- Build Relationships with the College: Partner with the school’s housing office or student organizations to keep that tenant pipeline flowing.

Is It Worth It?

Owning multifamily units in college towns is like signing up for a rollercoaster with both thrilling highs and stomach-dropping lows. If you’re someone who thrives on a little chaos, enjoys steady tenant demand, and doesn’t mind an occasional late-night call about a clogged sink, this investment might just be your golden ticket.

That said, it’s not for everyone. If the idea of constant turnover and high-maintenance tenants makes you break out in hives, you might want to consider a different investment strategy.

But here’s the silver lining: with careful planning, a little patience, and a good property manager, owning multifamily units in a college town can be a lucrative and rewarding experience. Just remember, those students are your tenants, not your party guests!