College towns are among the best places to purchase rental property because of the high demand for off-campus housing. Demand is so high, in fact, the New York Times reported that nearly 9 in 10 college students live off campus. Why are so many students choosing to live off campus? Off-campus housing is more affordable and offers greater freedom than traditional student housing.
An investment property in a college town gives real estate investors access to that large pool of tenants. And students aren’t the only ones who are prospective tenants in college towns. Every university has professors, employees, and support staff who may also be looking for rental properties.
WalletHub recently compiled a comprehensive list of the best college towns and cities in the U.S. They analyzed housing costs, cost of living, social environment, number of students, and local economies.
We’ve reviewed their data and added additional factors like housing market affordability, renter occupancy, rental rates, and income potential. The result? A list of 10 of the best college towns to buy a rental property.
10 College Towns to Buy Rental Property
1. Houston, Texas
Houston is the fourth largest city in the United States, with a population of 2.3 million. Houston is also home to over 40 colleges and universities, including the University of Houston and Rice University.
Last year, Houston’s housing market was a booming seller’s market. Fortunately for real estate investors, home prices are starting to stabilize while demand for rentals remains high.
Over half (57%) of households in Houston are renter-occupied, and the city has a price-to-rent ratio of 14.9%. Those aren’t bad numbers for a real estate investment.
2. Atlanta, Georgia
Atlanta is home to 57 colleges and universities, including Georgia State University, Georgia Institute of Technology, and Emory University. Atlanta is also ranked 7th in the number of students enrolled in the U.S.
For years, the Atlanta housing market has been a seller’s market. The primary reason was low inventory and high demand. However, the market is becoming more balanced, which presents an opportunity for real estate investors.
Over 5 million people live in Metro Atlanta, and 55% of the households are renter-occupied. That’s a lot of demand for rental properties – not just from college students. And Atlanta has a price-to-rent ratio of 23.6%.
3. Orlando, Florida
The Orlando Metropolitan Area is home to over 35 colleges, universities, and tech schools. They include the University of Central Florida and Rollins College.
The Orlando housing market is still relatively affordable, scorching, and presents many opportunities for real estate investors. Orlando is one of the few college towns where property owners can easily rent to students during the school year and tourists during summer vacation – ensuring revenue all year round.
Roughly half of all households in Orlando are occupied by renters, and the city has a price-to-rent ratio of 12.89%.
4. Phoenix, Arizona
Phoenix is the 5th largest city in the United States, with a population of 1.7 million. The city is home to 17 colleges, including Arizona State University.
Like many major housing markets, Phoenix is beginning to cool down after a pandemic boom. Prices are stabilizing, and supply is increasing. This presents an excellent opportunity for real estate investors to enter the Phoenix housing market.
Nearly half (44%) of households in Phoenix are renter-occupied, and the price-to-rent ratio is 20%. This generates steady demand for rental properties and creates an excellent opportunity to earn a high return on investment.
5. Denver, Colorado
Nestled high in the Rocky Mountains, Denver is known for its natural beauty, friendly people, and high quality of life, which attract new residents from all over – including students.
Denver is home to the University of Denver, the University of Colorado at Denver, and nine other colleges and universities.
The Denver housing market is one of the more expensive ones we’ve included in our list. The median sales price is almost $600,000. Despite that, Denver offers investors one of the highest price-to-rent ratios at 26.2% in a market where 50% of homes are renter-occupied. Those are great numbers for any real estate investment. Denver presents many opportunities to increase cash flow and yield a great return on investment.
6. Rochester, New York
Rochester is between Buffalo and Syracuse in the Finger Lakes region of New York. It’s home to 9 colleges, including the University of Rochester and the Rochester Institute of Technology.
Rochester is an affordable housing market with a strong demand for rental properties. It’s one of the few major metropolitan areas with a median sales price below $200,000. Over 1 million people live in the Rochester area, and over half (52%) of households in Rochester are occupied by renters. What’s more, Mashvisor estimates a price-to-rent ratio of 14 in Rochester. That’s not a bad return on investment for a college town.
7. Gainesville, Florida
Gainesville is in north central Florida and is home to 11 colleges and universities. The most well-known is the University of Florida.
Gainesville is an affordable housing market with high demand for rental properties and a tremendous price-to-rent ratio. The median sale price in Gainesville is still under $300,000. About 6 in 10 households are renter-occupied, and the city has a price-to-rent ratio of 18.3%.
The “birthplace of Gatorade” presents a lot of potential for real estate investors who want to invest in a college town.
8. Urbana, Illinois
Urbana is located 135 miles south of Chicago and is home to the University of Illinois at Urbana-Champaign and Parkland College.
Urbana-Champaign is more affordable and less competitive than the Chicago housing market while offering investors many of the same perks. These include steady appreciation and rental demand.
Homeowners occupy only 44% of households in Urbana-Champaign. That means 56% of homes are occupied by renters, creating plenty of demand for rental properties. Additionally, Urbana-Champaign has a price-to-rent ratio of 19%. Not bad for a small college town.
9. Little Rock, Arkansas
Little Rock is in Central Arkansas, just 130 miles west of Memphis, Tennessee. It’s home to 8 colleges, including the University of Arkansas at Little Rock and Pulaski Technical College.
The Little Rock real estate market is booming! And for several reasons. It’s an affordable market with an average list price below $250,000 and high demand for rental. Renters occupy 44% of households in Little Rock, and the city has a vacancy rate of a mere 1.2%. What’s more, Little Rock has a price-to-rent ratio of 19.5%.
10. Pittsburgh, Pennsylvania
Pittsburgh is in western Pennsylvania near the state border with Ohio, just 300 miles west of Philadelphia. It’s home to an incredible 29 colleges and universities, the most well-known being Carnegie Mellon and the University of Pittsburgh.
Pittsburgh was once a hub of U.S. steel production and coal mining. Today, it’s considered one of the best metro areas for STEM professionals. Thanks, in large part, to its many colleges.
The Pittsburg real estate market has been a solid investment market for years. Why? Affordable home prices, reasonable appreciation rates, a robust rental market, and excellent price-to-rent ratios. 58% of households in Pittsburgh are renter-occupied, and the city has a 24% price-to-rent ratio.
Are you looking for property in a college town?
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