Student housing has always been a safe place to invest during a recession. Historically, when the job market weakens, colleges tend to see higher enrollment rates as a result. As seen in current news, there are signs of this beginning to happen. A favorable market for investors to enter would be that of smaller college towns where enrollment has been challenged in years past. Large D1 universities have waiting lists and have been filling their campuses with students for upwards of 25 years in most cases, so smaller campuses will see the biggest change.
One major concern that most investors have is how their property will be managed.
Understanding student markets can have a huge impact on the success of a property management team. Inquire with property managers about their increase in gross revenue and NOI throughout their current portfolio to better understand if they would be a good fit. You should not shop for an investment broker by what they cost, but rather what they can produce. Filling a building is only a sign of lazy management, and those companies tend to NOT maximize potential revenue and capitalization reinvestment. Many of those companies are only concerned with stars on a map, not the quality of their management.
Use IREM and NAA to find companies with education, experience, and a proven track record of managing student housing. If your student housing community has less than 600 beds, DO NOT use the REITS and investment funds with an in-house property management department to manage your investment. Many private third-party management firms will work hard on your investment and not use your property as publicity! The large firms will put their best talent into their owned properties and will oftentimes use clients’ investments as stepping stones to growth before doing so. There are many smaller firms with ex-executives from large companies who moved on to build their own small firm—those are the talented individuals you’d want to hire!
All buildings have 4 walls, windows, and doors—that’s not where the competition between properties happens.
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