Archive for March, 2011

Three Reasons to Invest in Campus-Area Real Estate

Tuesday, March 29th, 2011

In the Long-Run, Renting Doesn’t Pay

Money spent on monthly rent payments should be looked at like money poured down the drain. You’re just not going to get it back.

If you own a campus-area property, you’ll still be paying mortgage payments each month. But at the end of it all, you’ll own an enormously valuable asset. It’s the same as when you’re trying to decide whether to rent or own for your primary residence, except with a campus rental, you’ll get your money back (and then some… a lot of some, in fact) in two ways:

1. Like any home you own, you’ll always have the option to sell it down the road for more than you paid initially… and actually keep the money.

In other words, when folks sell their primary residence, the money they get from it almost goes directly into their next home. So their housing investment is never truly liquid. But with a secondary income property, you can take that money and do pretty much whatever you want with it, since you won’t need to move as soon as you sell it. The investment is liquid.

Furthermore, since you probably won’t need the house for living in (after your kids graduate), you can hold onto it until market conditions are most favorable for a sale.

2. You’ll be getting rent the whole time. While you pay the mortgage, your tenants are paying you. And after the mortgage is paid off, the rent payments can provide a sizable, steady stream of extra income.

Stable Housing Markets

University-area housing markets are among the most reliable in the world. Take Waco, for example. Unless Baylor shuts down or relocates (which, as one of the oldest universities in the South, seems pretty unlikely), there’s going to be a steady presence of students and faculty and staff needing housing year after year after year. And since universities are enormous economic boons to their communities, the areas around college campuses are less likely to be hard hit by an economic downturn.

Furthermore, campuses are normally areas of high housing movement. Students usually only stay in the same place for a year or two, and usually leave town after four or five. Thousands of new students arrive each year. The constant movement makes it easy for homeowners to find tenants and keeps rents at a profitable level.

In a Down Market, Deals Abound

Still, despite the Baylor housing market’s relative good health, a real estate collapse like the one America just experienced touches every local market, including those in college towns like Waco. Home values around Baylor are about as low as they’re ever going to be, and federal interest rates are still rock bottom.

Furthermore, the housing crash hurt folks the most when it made it impossible to sell a home they needed to sell (say, for example, to relocate for employment purposes). But if you’re looking for Baylor real estate as an investment property, this won’t. In other words, if you don’t have to sell a home in order to buy one, the slumping housing market is actually working in your favor.

So there’s never going to be a better time to consider an investment in college real estate — especially if you have a son or daughter coming to study at Baylor, and are planning on sinking thousands and thousands of dollars into their housing costs anyway.

Give one of our Waco real estate specialists a call for more information.