With the new school year starting, students all over the nation find themselves searching for plausible and affordable housing. According to an article on Market Watch, there are certain college towns where your investments in homes and rental properties are sure to pay off. More and more investors are eyeing college towns as good places to buy rental properties. Housing demand is usually high in such places, vacancy rates are low, and rental prices are on the rise, according to Move Inc., a firm that runs a network of real-estate websites including Realtor.com and Move.com.
Recently, the firm highlighted 10 college towns where it could pay off to invest in a rental property. The first spot on the list belongs to the Boston-Cambridge market which is home to more than 50 colleges, including Harvard University and the Massachusetts Institute of Technology. The median list price for a home in this area is relatively high at about $335,000. A plus for investors is that they can demand steep rents. The average rental prices in Boston were $3,122 for a two-bedroom unit and $3,913 for a three-bedroom or larger unit in June. That more than covers a typical mortgage payment on a median-priced home, which is about $1,370, assuming a 20% down payment and a 30-year fixed-rate mortgage. Number two on the real estate list was ours truly, Nashville, Tennessee.
Houses in Nashville had a median list price of $189,900 in June 2011. Rental prices for a two-bedroom average $949, and the average rent for a three-bedroom or bigger unit is $1,020. That more than covers the typical mortgage payment of $770 on a median-priced home, assuming a 20% down payment and a 30-year fixed-rate mortgage. According to local broker Terry McAlister, Nashville is “a strong investors market for those looking to target the college- and graduate-student renters.” He continued, “Nashville has 16 diverse colleges and universities, and all are at freshman capacity, so where do the upperclassmen and graduate students go? They rent.” Other cities on the list are Chicago, Washington D.C., Houston, South Bend, Atlanta, Baltimore, St. Louis, and Syracuse. Here is a helpful chart comparing each city’s average mortgage, rent, and median listing prices (source) (picture).