Owning rental property in a college town is an attractive strategy for many investors. New students and faculty arrive each year, keeping the demand for housing strong, with home values and rent prices in many markets increasing by double digits.
This article will review 10 of the best college towns in which to buy rental property and pros and cons to consider.
Key takeaways
- The benefits of buying rental property in college towns include a large pool of prospective tenants, rising rent prices due to increased demand, and stable home value appreciation.
- Managing real estate investments in college towns may be more labor-intensive, which is why many investors choose to hire a good local property manager.
Why own rental property in a college town?
Before buying a rental property located in a college town, it's essential to understand the pros and cons. While there are numerous potential benefits, there are drawbacks to consider as well.
One of the most significant benefits of owning rental property in college towns is having a larger pool of potential renters to generate a steady flow of rental income.
Although students may make up a more significant percentage of tenants, rental property in college towns can also be leased to professors, university employees, and people who appreciate the vibrance of a college town.
Rent price increases in college towns may also be more consistent due to the high demand for student housing, and, in some cases, parents are the ones paying the rent. In addition, college towns often have growing local economies, leading to a steady appreciation in housing prices over the long term.
Two significant drawbacks to owning college-town rental properties are high vacancy rates due to tenant turnover and short-term leases if the home is rented to students. Rental property in college towns may also require increased maintenance and suffer more property damage.
There may be arguments between roommates that need to be resolved and complaints from neighbors about noisy parties. However, a good property manager and a thorough tenant screening process can help you reduce potential risks.
10 best college towns in which to invest in rental property
WalletHub recently analyzed data from more than 400 areas to compile a list of America's best college towns and cities.
When ranking the best college towns, WalletHub considered 30 key indicators. Criteria used included wallet-friendly factors like housing costs, cost of living, social environment, such as students per capita, and academic and economic opportunities, including quality of higher education and unemployment and job growth rate.
Here are the 10 college towns, according to WalletHub, that may also be good for real estate investors looking to buy rental property.
Home values and trends are from Zillow (as of March 2022); median rent prices and renter-occupied households are the most recent rent research from Zumper (as of April 2022); demographic information comes from CensusReporter.
1. Austin, TX
Austin is the capital city of Texas and the fourth-largest city in the state. Located midway between San Antonio and Waco, Austin has earned the nickname "Silicon Hills" due to a large number of high-tech companies and science, technology, engineering, and mathematics (STEM) graduates. The University of Texas at Austin, Concordia University, and Austin Community College are among the many institutions of higher learning located in Austin.
- Median home values: $676,077
- Change in home values (year over year): 38.6%
- Median rent (3-bedroom home): $2,396
- Rent change (year over year): 20%
- Renter-occupied households: 61%
- Population: 965,872
- Educational attainment (bachelor’s degree or higher): 53.4%
View Texas rental properties on Roofstock's marketplace.
2. Ann Arbor, MI
Ann Arbor is located in downstate Michigan, about one hour from Detroit and Toledo, Ohio. The local economy is primarily driven by high-tech employers attracted to the area by the University of Michigan's research infrastructure.
- Median home values: $470,751
- Change in home values (year over year): 12.6%
- Median rent (3-bedroom home): $2,550
- Rent change (year over year): 6%
- Renter-occupied households: 48%
- Population: 121,093
- Educational attainment (bachelor’s degree or higher): 77.3%
View Michigan rental properties on Roofstock's marketplace.
3. Provo, UT
Provo is located along the Wasatch Front and the shores of Utah Lake and is less than one hour from Salt Lake City. Provo is home to Brigham Young University, and with more than 34,000 students, is one of the largest private universities in the U.S.
- Median home values: $491,290
- Change in home values (year over year): 27.9%
- Median rent (3-bedroom home): $1,598
- Rent change (year over year): 25%
- Renter-occupied households: 57%
- Population: 116,886
- Educational attainment (bachelor’s degree or higher): 42.9%
4. Orlando, FL
Orlando is home to dozens of colleges and universities, including the University of Central Florida, Florida State University College of Medicine, and Valencia College. Located midway between Tampa and the Atlantic coastline, Orlando is the third-largest city in the state, just behind Miami and Tampa.
- Median home values: $354,259
- Change in home values (year over year): 27.5%
- Median rent (3-bedroom home): $2,309
- Rent change (year over year): 28%
- Renter-occupied households: 55%
- Population: 284,817
- Educational attainment (bachelor’s degree or higher): 40%
View Florida rental properties on Roofstock's marketplace.
5. Oxford, OH
The small college town of Oxford is located in northwestern Ohio, midway between Cincinnati and Indianapolis. Oxford is home to Miami University, the tenth oldest public university in the U.S.
- Median home values: $284,054
- Change in home values (year over year): 14.2%
- Median rent (3-bedroom home): $923
- Rent change (year over year): Data unavailable
- Renter-occupied households: 63%
- Population: 23,192
- Educational attainment (bachelor’s degree or higher): 64.4%
6. Gainesville, FL
Gainesville is home to 4 prominent colleges and universities, including the University of Florida, the fourth-largest public university campus by enrollment this year. The university is also the city's primary economic engine, attracting nearly 200 high-growth enterprises and startups to the area.
- Median home values: $268,381
- Change in home values (year over year): 20.1%
- Median rent (3-bedroom home): $1,699
- Rent change (year over year): 13%
- Renter-occupied households: 52%
- Population: 133,611
- Educational attainment (bachelor’s degree or higher): 47.9%
View Florida rental properties on Roofstock's marketplace.
7. Scottsdale, AZ
Scottsdale is among the fastest-growing cities in the country and is bordered by Tempe to the south, home to Arizona State University. Total enrollment at the university is nearly 75,000, and many students live in Scottsdale and commute to campus. Other higher education institutions in Scottsdale include the University of Phoenix and the Mayo Clinic School of Medicine.
- Median home values: $820,126
- Change in home values (year over year): 30.7%
- Median rent (3-bedroom home): $3,995
- Rent change (year over year): -2.0%
- Renter-occupied households: 20%
- Population: 254,995
- Educational attainment (bachelor’s degree or higher): 59.5%
8. West Lafayette, IN
Home to Purdue University, West Lafayette is located in northwestern Indiana, about midway between Indianapolis and Chicago. The town is also home to several private schools and a branch of Ivy Tech Community College.
- Median home values: $324,806
- Change in home values (year over year): 21.8%
- Median rent (3-bedroom home): $1,563
- Rent change (year over year): 21%
- Renter-occupied households: 44%
- Population: 230,353
- Educational attainment (bachelor’s degree or higher): 35.3%
View Indiana rental properties on Roofstock's marketplace.
9. Rexburg, ID
Located in southeast Idaho, about 30 minutes north of Idaho Falls, Rexburg is home to Brigham Young University-Idaho. The population of Rexburg has nearly doubled in size over the past 20 years, with a significant portion of the economy and housing demand driven by the university.
- Median home values: $406,426
- Change in home values (year over year): 20.7%
- Median rent (3-bedroom home): $1,548
- Rent change (year over year): 64%
- Renter-occupied households: 70%
- Population: 39,409
- Educational attainment (bachelor’s degree or higher): 43.4%
10. College Station, TX
College Station is home to the main campus of Texas A&M University, with ongoing research projects funded by federal agencies, including NASA, the National Science Foundation, and the Office of Naval Research. Located midway between Houston and Austin, College Station is also home to the Texas A&M Health Science Center and Blinn College.
- Median home values: $304,183
- Change in home values (year over year): 14.2%
- Median rent (3-bedroom home): $1,450
- Rent change (year over year): 8%
- Renter-occupied households: 68%
- Population: 115,802
- Educational attainment (bachelor’s degree or higher): 57.8%
View Texas rental properties on Roofstock's marketplace.
