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Back to School:
Top 10 college towns for rental property investments
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individual reader’s facts and circumstances.
As the air gets crisper and the leaves start to change, we become nostalgic with that feeling of going back to
school and tackling the fresh opportunities ahead. With that in mind, today’s post will explore the best college
towns for rental property investment. College students will always need a place to rent, making the market
somewhat insulated from greater economic conditions. Moreover, these properties don’t need to be terribly
fancy, as this will most likely be a “starter” home for those on their own for the first time. We took the top 20
mid-size metro areas named as America’s best for students by the American Institute for Economic Research
and ranked the top 10 metros for rental property investment by annual gross yield.
Some results were surprising: San Jose, CA, named by AIER as the best mid-sized metro for students, came
in last as a rental property investment market, with a 3.1% annual gross yield, while Cincinnati, OH, ranked
20th by AIER, came in fifth, with an 8.4% yield. Of course, there are other factors to consider, such as
unemployment and vacancy rates, but it’s an insightful starting point if you are considering a foray into student
housing.
Methodology: Referencing the top 20 mid-size metro areas named in AIER’s 2014-2015 College Destinations
Index, we took each metro area’s 2015 fair market rent for 3-bedroom units (issued by the U.S. Department of
Housing and Urban Development) and calculated the annual gross yield by taking the annualized rental
income and dividing it by the corresponding metro’s 2015 second quarter median sales price (projections
provided by the National Association of Realtors).
2. 1
1) Rochester, NY
Annual gross rental yield: 9.7%
Fair market rent for 3-bedroom unit: $1,093
Median sales price 2015 Q2: $135,000
Population (U.S. Census, 2012): 1,056,940
Student concentration (per 1,000 residents; U.S. Census, 2012): 86.9
Unemployment rate (BLS, 2013): 7.1%
Schools: Rochester Institute of Technology, University of Rochester
3. 2
2) Cleveland, OH
Annual gross rental yield: 9.5%
Fair market rent: $1,023
Median sales price: $129,700
Population: 2,063,535
Student concentration: 69.9
Unemployment rate: 7.5%
Schools: Case Western Reserve University, Cleveland State University
4. 3
3) New Orleans, LA
Annual gross rental yield: 9.3%
Fair market rent: $1,192
Median sales price (2015 Q1): $154,100
Population: 1,205,374
Student concentration: 74.2
Unemployment rate: 6.1%
Schools: Tulane University, University of New Orleans
5. 4
4) Buffalo, NY
Annual gross rental yield: 9.1%
Fair market rent: $982
Median sales price: $129,800
Population: 1,134,210
Student concentration: 82.4
Unemployment rate: 7.5%
Schools: SUNY University at Buffalo, SUNY Buffalo State College
6. 5
5) Cincinnati, OH
Annual gross rental yield: 8.4%
Fair market rent: $1,065
Median sales price: $151,900
Population: 2,146,560
Student concentration: 74.2
Unemployment rate: 7.1%
Schools: University of Cincinnati, Xavier University
7. 6
6) Oklahoma City, OK
Annual gross rental yield: 7.9%
Fair market rent: $1,024
Median sales price: $156,300
Population: 1,296,565
Student concentration: 77.6
Unemployment rate: 5.1%
Schools: Oklahoma State University–Oklahoma City, Oklahoma City University
