They say real wealth is made in real estate…
But in every aspect of wealth there are winners and there are losers.
The winners know exactly where to make money in real estate and more importantly when.
Lucky for you, I’ve got the where and when with this real estate gold mine, and before I go any further, I can let you know the when is now…
Real estate is tricky business. There are a lot of factors to consider.
The kind of property, the location, whether to sell or rent, whether you need a property manager, cleaning and upkeep costs, market trends, likelihood of consistent occupancy—you name it.
With so many variables, it’s hard to know where to turn. There is no single right answer, but I may have found a venture that can give you a consistent and sizeable payout for minimal effort.
For this real estate tip, location is everything, but the locations that are your best bet might surprise you!
Though purchasing and reselling properties is a great way to make a lot of money quickly, renting properties can prove to be much more lucrative over time, as they provide you with an ongoing source of income that continues indefinitely.
But even once you’ve decided to rent rather than sell, how do you know where to do it?
People will give you all sorts of advice—head to the cities that are showing economic growth or aim for places with tax break opportunities. All of it can be great advice, it just depends on how you use it.
No matter what advice you follow though, it’s essential that you choose a place with the demand for rental properties. If there is no one looking for a place to live, it doesn’t matter how great of a tax opportunity you found.
So where can you find a consistently high demand for rental housing at high prices?
As of 2018, 60% of students at state universities and 38% of students at private colleges lived off campus while attending school full time. In addition to this, almost 90% of graduate students live off campus.
All of those students (half of 19.7 million college students as of the 2019/2020 school year) need rentals!
College students, particularly at affluent universities, are the ideal tenants, because they are sure to occupy a rental for at least a few years, have a wide network of fellow renters to recommend your property to, and have fairly sizeable budgets thanks to outlandishly high on-campus housing costs.
Though the percentage of students living off campus at private colleges is a bit smaller than the number for public universities, the digging I’ve done for you proves that purchasing a property to rent in the town of a private college is the way to go.
There are a few reasons, but the biggest one is the budget of potential renters. Cities where colleges are installed usually have a fairly high cost of living, which includes property prices.
This is thanks to the high density of people in the area, the constant influx of new residents, and the configuration of the town or city around the college.
For public universities—especially those in big cities—real estate prices are astronomical, but the budget for student renters is below average. This means that you pay more for your property but make less back each month.
Take UCF for example. One of the biggest colleges in the country, UCF is based in Orlando, Florida.
A huge percentage of students live off campus for at least a year or two of their time at the college, but the average monthly rent paid by those students is about $750 per month for a studio, or $600 per person for a two-bedroom split between two people.
However, the city averages for Orlando are $1,072 for a studio and $1,349 for a two bedroom, which means your annual return would end up being between $1,788 and $3,864 less than the city average.
But for private colleges, that all changes.
Private colleges are some of the more expensive colleges in the country. The ones
we’re looking at charge an average tuition of about $50k per year!
These colleges also charge astronomical rates for room and board, which is leading more and more students to search for housing off campus.
Unlike state universities though, students at private colleges are often willing to spend a little bit more on rental costs. Part of this is the relative affluence of private college student bodies, and part of this is because it isn’t hard to beat the crazy costs of living on campus.
For the top private colleges in the country, housing costs between $13,144 and $17,580, and that’s just for the 8 months when school is in session! It costs extra—often at a higher rate than the semester—for students to live on campus in the summer.
Just to give you some perspective, let’s say a student lives on campus for one year at a college charging $15,000 for two semesters of room and board.
If the meal plan for the school is the average $3,000, that means $12,000 is spent just on the room, which is likely a 500 square foot double room with a shared bathroom and no kitchen.
Each semester lasts for 4 months, so the housing cost per month comes out to a whopping $1,500 a month!
And that’s for a small two-person room with no appliances and a less-than-ideal bathroom setup.
That’s where you come in.
Students who are attending a private college are often accustomed to a certain level of
comfort, and they are willing to pay to maintain that comfort while they attend school.
If you buy up several studio apartment spaces, you can charge $1,500 a month (which is about $700 over the national monthly average for a studio) and students will think it’s a steal because it includes the private bathroom and kitchenette that they would miss out on for the same price living on campus.
For just four 500 square foot units, you can earn $48,000 in 8 months!
And the best part is, you can require a full year lease even if students leave for winter and summer breaks, which means in a year, you’ll have $72,000!
Now, you’re probably wondering where you should start looking for your future fortune- making property.
There are tons of options all over the country, but some of the best are Evanston, Illinois, Durham, North Carolina, and Claremont, California.
Evanston is a great opportunity for making a strong profit on this college goldmine. The city is home to Northwestern University, which charges its students a hefty $14,936 for a year (not including winter break or summer) of on-campus housing.
In the town, the average going price for a studio is $1,190, and the rate for a 1- bedroom hovers around $1,360.
Because of this, Evanston is a golden opportunity.
You see, you want to take advantage of the chance to charge high rates for small space, but that gets difficult if other renters are offering prices much lower than the on- campus rates.
To ensure that your property is in high demand and is making optimal profits, you want a college town with rates just a little bit lower than on-campus costs.
Just like Evanston, Durham is the perfect location for just that. Studios and 1-bedrooms go for $900- $1,000 in the town (which is the location of the famous Duke University). These going rates are only about $200-$300 less expensive than on-campus housing, which means you can charge a healthy $1,000 for a small apartment and know for sure that students will be clamoring to rent it.
Durham even has the added bonus of lower than average property costs, which means less overhead when you first start out!
But even though these cities and others like it are chock full of real estate earning opportunities, there is one city that takes the cake.
Claremont is the cream of the crop for college towns and is guaranteed to give you a consistent and large real estate profit thanks to the whopping 3 different private colleges located in the little town.
Pitzer College, Scripps College, and Harvard Mudd College are all located in Claremont, and they charge $15,210, $15,108, and $16,506 respectively for 2 semesters of housing.
Plus, in the city of Claremont, studio apartments go for an average of $1,310, so your rate of $1,500 seems par for the course and is more than fair when you consider the thousands of students searching for accommodation each year.
This opportunity, though very specific and perhaps a little unorthodox, is one of the most fool-proof ways to avoid worry over filling your properties. The real estate surrounding colleges is some of the most prime property in the country, and students will fight for the chance to call it their own—or pay you quite a bit more than you could dream of making anywhere else.
By taking advantage of the demand for off-campus student housing, you avoid one of the biggest pitfalls of renting, plus you make more per apartment than most renters can dream of!