What You Need to Know About Investing in Multifamily Real Estate in College Towns

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Real estate properties located in college towns can offer unique opportunities for investors. But before they can capitalize on these benefits, first they need to understand what makes college towns different from other locations.

Properties in college towns enjoy fairly stable rental prices and have access to a large potential tenant market. The high demand for rentals in these locations can keep rental prices stable even when other parts of the housing market are failing. This level of demand also means there are fewer vacancies, so investors do not have to worry about cash flow. There are always students and college employees looking for somewhere to live.

These properties tend to do well because the area sells itself. This means investors get to save money on marketing.

College towns draw people in, not just because of the colleges and universities near them, but also because of the attractive amenities within. There are endless activities available when it comes to sporting events, culture, arts, music, and entertainment. College towns also have plenty of restaurants and shops, most of which are within walking distance. [1]

That said, college towns also have disadvantages. For example, properties in college towns tend to have frequent tenant turnover as well as significant wear and tear issues due to the behavior of college students. Because of this, BAM Capital utilizes a different strategy when it comes to multifamily real estate in college towns, which we will discuss here.

What You Need to Know About Investing in Multifamily Real Estate in University Towns

When it comes to multifamily real estate investing, maintaining cash flow is one of the most important factors for success. And when it comes to cash flow, properties in college towns have no problem maintaining it because units are always occupied. For investors, this makes college towns attractive.

But even if you are guaranteed an influx of renters each fall, investing in college town properties comes with a few concerns. Student behavior is one of those issues, with college students being rowdy and destructive when it comes to living spaces. Your investment property can get damaged on a regular basis. From damaged floors to broken cabinets to holes in walls, property damage is a very common concern in college towns. [1]

This is why BAM Capital does not focus on renting to students. BAM Capital takes a different approach to college town properties while still making sure that investors can make the most out of these benefits. Instead, it focuses on renting to professionals and labor forces that work at the university, hospitals, or other industries that are adjacent to the college.

Normally, investing in a college town cannot be considered a passive investment. Investors have to address concerns like property damage, roommate conflicts, and noise complaints. But with BAM Capital, investors do not have to worry about managing tenants and all the responsibilities that come with being a landlord. BAM Capital’s multifamily syndication approach to investing makes college towns even more appealing for investors

What is Multifamily Syndication?

A multifamily property is any real estate property that has more than one unit. This includes duplexes, triplexes, condominiums, and other properties where more than one family unit can live.

Multifamily syndication is a type of real estate investment wherein multiple investors pool their money in order to purchase an asset. In a multifamily syndication, a sponsor or syndicator locates the deal and coordinates the transaction and financing of the property. They also handle property management. Passive investors supply most of the capital required and earn from the cash flow as well as the equity once the deal is finished. [2]

Although any type of real estate investment property can be used for this type of deal, multifamily syndication is currently the most popular. This is partly due to the fact that multifamily properties are generally more expensive, and therefore more difficult for a lone investor to purchase.

For investors looking for a passive investment, BAM Capital can help you out through multifamily syndication. Multifamily syndication provides consistent income and is considered one of the safest types of real estate investment.

Why College Towns Make Great Multifamily Syndication Targets

College towns are the perfect targets for multifamily syndication because investors do not have to worry about managing the property or dealing with tenants. Even if you choose a property that caters to college students, you would not have to worry about their emergencies.

There is consistent demand from new renters every year. Higher demand means lower vacancy rates, which translates to continuous cash flow. College towns provide a solid and stable investment for real estate investors. All of these factors add up to a great return on investment. [3]

As for the cons of investing in multifamily real estate in college towns, tenant turnover is usually a concern for landlords. You have to deal with the headaches and expenses of turning a unit, which is something you have to do regularly as students come and go. Not to mention college students rarely know how to take care of a property.

That said, BAM Capital’s strategy does not involve renting to students. BAM Capital always looks for the safest investment for their investors, which is why they focus on renting to professionals and labor forces that work at the university rather than the students themselves.

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Colleges tend to attract labor forces that need housing. This includes restaurant workers, hospital staff, IT professionals, marketers, and other college employees that move in the area for work.

Generally speaking, the pros of college town real estate properties tend to outweigh the cons, especially since it generates a continuous cash flow. Investors who want to put money into a college town property should skip the undergrads and focus on properties that serve graduate students, faculty, administrators, and employees. [3]

This allows them to avoid most of the cons that are typically associated with these properties. Employees and faculty are generally less destructive, which is a trait that is more often found in undergraduate students.

Investors are also advised to do their due diligence on the college itself. Try to find out whether it is growing or shrinking. There are some schools that impose a cap on neighboring rental rates. These are some of the things investors need to look at before choosing a property to invest on.

But when it comes to multifamily syndication in college towns, it is best to consult with the professionals. BAM Capital locates the best investment property and handles the syndication deal so that passive investors can just enjoy their investment.

Work with BAM Capital

BAM Capital is the private equity arm of The BAM Companies, which is an institutional real estate owner/operator. BAM Capital gives its family of investors access to premier real estate investment opportunities, including those in college towns. With multifamily syndication, BAM Capital provides investors access to portfolio diversification and tax-advantaged, long-term wealth creation.

BAM Capital has a Midwest focus, prioritizing Class A, A-, and B++ multifamily assets with in-place cash flow and proven upside potential. This strategy mitigates risk for passive investors, while allowing the fund to target consistent monthly cash flow. [4]

BAM Capital works with accredited investors and negotiates the purchasing and financing of high quality multifamily real estate properties on their behalf. This Indianapolis-based company currently has $650M AUM and 5,000 units. Schedule a call with BAM Capital and invest today.

BAM Multifamily Growth & Income Fund III

BAM Capital created this fund in order to yield consistent and reliable cash flow, long-term appreciation, and accelerated tax benefits. The fund aligns with BAM Capital’s demonstrated track record of successful multifamily investing by continuing to implement our signature investment thesis, now in fund format. The fund aims for greater overall returns and lower risk through a multi-asset diversification strategy.

  • Consistent passive income
    Lower-risk assets with in-place cash flows with the ability to distribute preferred return after acquisition.
  • Significant tax benefits
    A cost segregation analysis allows for accelerated deprecation to years of ownership. This large passive loss gets passed onto investors through a K1.
  • Vertically integrated company
    In-house property management and construction allow for predictable cost reduction and value add.

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The contents on this site are for informational and entertainment purposes only and do not constitute financial, investment, or legal advice. BAM Capital cannot guarantee that the information shared on this post or page is appropriate for you and your financial situation. By using this site, you agree to hold BAM Capital and any and all entities related to the writing & publishing including BAM Capital’s parent company harmless from any ramifications, financial or otherwise, that occur to you as a result of acting on information found on this site. Always consult your investment advisor, CPA, and other professionals before making an investment. BAM Capital is excited to help you grow your investment assets. Please contact us to see how we can help you.