Dallas-Fort Worth has no shortage of colleges and universities. There’s TCU in Fort Worth, SMU in Dallas, and UNT in Denton, just to name a few. Not to mention the community colleges all around the metroplex.
From a real estate perspective, college towns are booming markets. Everyone needs housing including students, faculty and campus employees. But the high amount of traffic also brings its own concerns, like parking and potentially irresponsible renters.
So the question is, should you own investment properties in a college town? Let’s dig into the pros and cons of investing in this type of neighborhood and how to make it work.
Pros of Investing in College Town Property
Of course, the top benefit is you won’t have to worry about filling a vacancy. There’s always a steady flow of people looking for a rental property, and an area with high demand means you can ask for more in rent. Win-win.
The top concern of investors looking at college town property is the income of their tenants. Will they have the money to pay on time? However, in most cases the parents of a tenant will gladly co-sign so don’t let income deter you from investing. In fact, having parents co-sign is a positive for landlords because of the financial responsibility.
The final perk of college-area rental properties is the predictability of the lease terms. Generally, tenants will need housing for several years and you can rely on them to renew throughout that time.
Cons of Investing in College Town Property
There are negatives to owning rental properties in a college town, and parking is an unavoidable problem. Just think: for a three bedroom house, you may have up to 12 cars in the driveway and on the street when friends, girlfriends, or boyfriends visit. Set the expectation with your residents upfront. If they invite many people over they may have parking issues during certain times of the day.
Before you purchase a property, you should also read through the HOA rules regarding non-residents visiting. Some HOA terms limit the number of visitors that residents can have over at one time. Make sure you purchase a property in a location where your tenants can follow the rules. A max of one or two guests at a time in a house with three roommates is simply unrealistic.
Finally, check the income disbursement when qualifying multiple tenants. The entire household may qualify as a whole, but one person could be making most of the money. If that person moves out, the remaining people won’t be able to pay rent. Make sure disbursement is relatively even across the board.
Are You Ready to Invest in the DFW Area?
Interested in investing in one of Dallas-Fort Worth’s college neighborhoods? Contact us for a free consultation. We’ll tell you what to look for and how to qualify your tenants.