by Broderick Perkins
(8/17/2011) - The cost of education comes with the cost of student housing, but savvy investors can make a real killing on investment properties in the right college towns these days.
"Housing demand in college towns is generally high and vacancy rates are usually low. Combine the supply and demand ratio with rising admissions and the five percent rise in rental rates expected by the end of the year, and rental property in college towns can be a smart option for the right investor," said Move, Inc. Chief Executive Officer, Steve Berkowitz.
To help real estate investors considering university towns, Move.com recently released a list of ten college towns that can yield an A-plus investment.
Parents can use the data too, especially if they are thinking of the cost of housing for a child for the next four to six years.
The right property, say a duplex or triplex, even a larger single-family home (SFH) property, could come with housing for the student and enough rental income from the other units or roommates to help pay for the acquisition.
Move selected college towns based on the leading universities featured in the U.S. News & World Report College Compass Best Colleges 2011. Move.com also considered the cost of a monthly mortgage payment (30-year, fixed-rate mortgage, 20 percent down) based on an areas' June median price for homes vs. the average cost of rent for both a two-bedroom and a three-bedroom rental unit for the same period.
Here's a sample of what Move.com found:
Boston, MA - With a median list price of $335,000 in June 2011, the Boston/Cambridge market yielded a $1,370 mortgage payment compared to rents ranging from $3,122 to $3,913 a month. Demand comes from 50 colleges including Harvard and MIT.
Nashville, TN - Nashville is home to country music and Vanderbilt University. Rents range from $949 to $1,020, but the mortgage payment is only about $770.
Chicago, IL - Home of the University of Chicago and the most searched metropolitan area in the nation on Realtor.com, Chicago has a median price that yields an $820 mortgage payment, compared to rents that range from $1,780 to $2,074.Washington, D.C. - Given employment is booming, thanks to big government, a Georgetown University student could get a job and help pay the $1,530 mortgage payment, which is half the area rents, ranging from $3,086 and $3,214.
Houston, TX - Headquarters for Rice University, Houston offers homes that come with a $710 mortgage payment. Average rents range from $1,218 to. $1,478.
Other top markets on the Move.com list of top college towns for investors (or students' parents looking for a housing bargain) were, South Bend, ID; Atlanta, GA; Baltimore, MD; St. Louis, MO and Syracuse, NY.
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