Monday, December 4, 2006

Off Campus Student Housing A Strong Investment Choice

My business partner and I have long advocated the investment benefits of student housing properties. I can show the benefits on paper, but two industry experts have recently written on the subject, calling off-campus student housing an even better bet than most might think.

"Unlike the larger rental market, which is subject to economic swings, student housing is recession-resistant, and may well be practically recession-proof," say Richard Levy and Michael Tucker. The two are executives of the National Multi Housing Council, so naturally, readers might suspect they are biased. Still, they confirm what investors in campus area properties -- and brokers handling those properties -- already know. Off-campus housing is a tremendous place to grow investment funds.

"In addition to the favorable demographics that the echo boomers will create over the next decade, the non-cyclical economic nature of higher education is an important consideration. In good economic times, a college degree provides an important credential in the job market. In difficult economic times, people attend college to improve marketability and temporarily avoid a challenging job market," they write. A quick check with The College Board shows that many students take longer to graduate these days and remain in student housing longer than previous generations. In fact, almost 40% of today's undergraduates are over age 24, The College Board reports. So in either good or bad economies, student housing is in strong demand.

I can tell you that many owners of property around the Ohio State campus, for example, are absentee owners and have never seen their properties in person. They are quite content to get a check once a month, or once a quarter, and fully, and legally exploit their tax advantages. The same can be said for other "big city" campuses. Currently, several out-of-state colleagues in the Prudential CRES network have investors seeking off-campus student housing investments.

Who knew that people would want to return to college after all these years ? . . . only as investors instead of students?

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