Huge rentals in college neighborhoods are prompting parents to buy condos for their children, increasing sales in and around college towns, a recent survey showed.
According to the "Top 10 College Town For Investors" survey by Realtors.com, parents investing in properties around colleges have increased. A surge in investors looking at rental properties was also recorded.
"I've had parents of students get frustrated with the huge price tag on some of the rentals here in the Boston area and they found that it made more sense to buy a condo for their child," said Boston-based realtor Willie Mandrell in a statement.
Shelling out money in college town real estate is considered an investment by parents. Many even sell these properties once their children graduate. For instance, in 2002, Jim Pyle, then a Georgetown University Law student, bought a house on Capitol Hill that he sold after graduation. Pyle reportedly made a profit of $200,000, the Washington Times reported.
"In today's market, many real estate investors aren't necessarily the experienced short term investors of the past. In many cases, they're average consumers interested in planning for their financial futures and they look to real estate as a longer term investment option," said Errol Samuelson, president of Realtor.com. "Rental properties in college towns can be a great option for some investors since schools can present a steady stream of renters that need housing."
Meanwhile, there are certain markets that have always favoured investors. Pittsburgh is one such college town. "Because we're home to almost 10 colleges and universities within a 10-mile radius of the Pittsburgh city boundaries, there have always been a shortage of housing for students,” Darla Jobkar of Northwood Realty Services said in a statement. “For this reason, college and university real estate investments in this area over the years have been a huge success to both long term and short term investors."
Boston and Washington DC topped the charts as markets where majority students prefer off-campus housing option. These markets also provided the largest potential monthly profit for investors. The potential cash flow for Boston was projected as $1,844 per month whereas for Washington, DC it was $1,177.
In terms of rents, all bedrooms in Boston can be rented for $3,084, while $2,637 is the expected amount in Washington, DC.
Top 10 college towns for investors:
Boston, MA
Princeton, NJ
Chicago, IL
Washington, DC
Houston, TX
Philadelphia, PA
Atlanta, GA
Pittsburgh, PA
Providence, RI
Los Angeles, CA
