10 best college towns to co-buy a rental property
If you’re a budding real estate investor, college towns present an excellent opportunity to co-buy property. You get a steady supply of new prospective tenants each year, and you can often find relatively affordable housing options. Thus, investing in real estate in college cities and towns is an attractive option.
Some college towns make for much savvier investments than others, though. WalletHub recently analyzed data from more than 400 areas to compile a list of the 10 best college towns in the U.S. to invest in rental property. Take a read below to understand what kind of return on investment you can expect if you were to co-buy a home in these areas.
What is a college town?
College towns are communities or towns dominated by a university student population. Additionally, the educational institution significantly impacts the city or town’s economy and culture. Many consider college towns ideal places to live because of their vibrant culture and thriving economy. One example of a quintessential college town is Berkeley in California. It is home to the University of California, Berkeley.
Why invest in a college town?
There are nearly 4,000 colleges and universities in the U.S., and many students at these universities need a decent place to live. As a real estate investor, you can help fill that need while supporting your financial and investment goals. Let’s look at the bigger picture of why investing in a college town is a good idea.
1. Continuous Demand
Each year, a fresh batch of students heads to college campuses, allowing you to have a large pool of potential tenants. It is safe to say there won’t be a shortage of people looking for a place to rent. While campus housing is excellent, many campuses either do not have enough dorms for all students or many students want to live with friends in off-campus housing near the campus.
2. Reliable income sources
Many students have family members paying for them to attend university. These family members may also cover their rent. Adults with an established rental history and steady income stream are more reliable than teenagers juggling classes and working a job.
Not only do you have students as potential tenants but college towns are also home to many people supporting the university, like professors and other faculty members who are potential renters.
3. Steady rates
Because there is a continuous demand for student housing, landlords and property owners can set their rental rates at market value. This also means rent price increases may be more consistent in college towns due to the high demand for student housing and steady appreciation in housing prices over the long term.
Top 10 college towns and cities in America
WalletHub released a report on the best college towns and cities in America. The report compared college towns across three categories: wallet friendliness, social environment, and academic and economic opportunities.
Social environment is determined by metrics like students per capita; breweries, cafés, and food trucks per capita; and safety issues like vaccination and crime statistics.
As for the number one college city in the United States, it goes to Austin, Texas. Austin benefits from the creativity and industry of college living but there is much more to do than go to gentrified lunch spots and underground shows.
Florida is the most represented state in the list, with four cities in the top 10. As for the rest, the top 10 college cities for 2023, according to WalletHub, are:
- Austin, Texas
Austin topped the list as the best college town in America. 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%
2. Ann Arbor, MI
Ann Arbor is a bustling university town, culinary hotspot and tech hub with a walkable downtown. Not only is it home to the University of Michigan, of course, but you can also find excellent dining, unique retail and world-class arts and culture.
- 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%
3. Provo, UT
Provo is the fourth-largest city in Utah. It is less than 50 miles south of Salt Lake City and often ranks near the top of national polls regarding desirable places to live, work and play. 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 more than just amusement parks. Orlando attracts more than 60 million visitors yearly who come for warm climate, the world-famous theme parks, shopping malls, golf courses and nightlife. Orlando is also home to dozens of colleges and universities, including the University of Central Florida, Florida State University College of Medicine, and Valencia College. If that isn’t enough, don’t forget about some of America’s finest beaches that are within easy reach.
- 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%
5. Oxford, OH
Oxford is a small-town community with close to 7,000 year-round residents. It is also home to Miami University, which is one of the most beautiful campuses and is recognized as a Public Ivy—meaning its academic programs are akin to the Ivy League schools.
- 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
Gainsville offers a combination of college-town vitality and protected natural beauty, making it a place where nature and culture meet. Gainsville is also home to four colleges and universities, including the University of Florida, the fifth-largest public university campus by enrollment.
- 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%
7. Scottsdale, AZ
Scottsdale is located in the beautiful Sonoran Desert at the foot of the scenic McDowell Mountains. Phoenix borders it to the West, the Tonto National Forrest to the North, the McDowell Mountains to the East, and the Salt River to the South. Universities in the area include Arizona State University with about 75,000 students, 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
West Lafayette is in northwestern Indiana, about midway between Indianapolis and Chicago. The town is most famously home to Purdue University but also 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%
9. Rexburg, ID
Never heard of Rexburg? It is home to Brigham Young University, about 30 minutes north of Idaho Falls. Rexburg is one of the fastest-growing cities in the U.S., and its population has nearly doubled in size over the past 20 years. This is thanks to the university, which significantly drives its economy and housing.
- 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 the home of Texas A&M University. It is an exciting and vibrant college town in the heart of Texas, midway between Houston and Austin. It is also known as “Aggieland.” The area is filled with unique history, museums and trains, a zoo, safari on foot and more.
- 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%
Cities and towns with universities or colleges can be attractive for many real estate investors. Housing demand is generally high and vacancy rates are usually low. Having a rental property in college towns can be an intelligent option and it starts with understanding the 10 best college towns. This will serve as a useful starting point for your research.
Nestment, Inc. does not guarantee and is in no way responsible for the accuracy of information provided in this blog post. All information is provided “AS IS” and with all faults. Data presented here may not reflect all real estate activity in the market. While the information on this site is about legal and tax issues, it is not intended as legal or tax advice or as a substitute for the particularized advice of your own attorney and tax professional.
