5 Compelling Benefits to Why Student Housing
Makes Sense in Your Portfolio
1. Recession Resilient
Attendance is age driven. The majority of kids go to college when they turn 18 thus student housing has a low correlation to the economy. Historically, enrollment increases during recessions.
2. Anchored by Major Universities
Student housing thrives when local economic factors impact other real estate assets.
3. Favorable Depreciation Schedule
Student housing is considered residential and therefore qualifies for a 27.5-year depreciation schedule vs. industrial and retail real estate which has a 39-year depreciation schedule. This means there are more deductions to shelter the property income.
4. Rent by the Bed
The leases have 12-month terms that are usually guaranteed by the parents creating a predictable rental income. In addition, every $1 of rent increase or $1 of decreased expenses, enhances the value of the property by $20 assuming a 5% cap rate.
5. Opportunities for Ancillary Income
By charging for amenities such as bike storage, parking, and high-speed internet amongst others, it increases operating income and thus the potential future value of the property.