With the thrilling climax of the college sports season, it’s also an exciting time for real estate investors who own rental properties in high-profile college towns.These landowners probably knew this all along. Rental for students It is one of the most advantageous places to earn consistently high yields.
Bringing national attention to the college town you’re investing in is like posting a giant ad outside your property to attract future tenants.Universities in the South and Midwest typically reflect the real estate of these regions and have offered the strongest universities cap rate For recent investors.
Here, we take a closer look at cities where great sports teams and great investments go hand in hand. We ranked college towns based on their rent-to-price (RTP) ratio. RTP is calculated by dividing the gross monthly rent by the purchase price (or market price in subsequent years). The standard His RTP used by investors is around 1%, often referred to as the 1% rule, but a His RTP of over 0.6% is also considered good. So, if a property rents for $2,000 per month and has a market value of $2,000, the RTP is $2,000/$200,000, or 1%.
It’s important to note that every market has its fair share of high and low RTP zip codes. Every market has cash flow to generate. All you need to do is find it.
Rent-to-price ratio for each university market
1. University of Alabama (Tuscaloosa, Alabama): 0.76%
2. University of Dayton (Dayton, Ohio): 0.67%
3. Texas Tech University (Lubbock, Texas): 0.66%
Four. northwest (Chicago): 0.64%
Five. University of South Carolina (Columbia, South Carolina): 0.64%
6. Indiana (Terre Haute, Indiana): 0.63%
7. Texas A&M (College Station, Texas): 0.63%
8. mississippi (Starkville, Mississippi): 0.62%
9. University of Illinois (Champaign, Illinois): 0.62%
Ten. high point university (Greensboro, North Carolina): 0.60%
Explore top college towns
tuscaloosa, alabama
The University of Alabama is a big draw for real estate investors. However, the Alabama Crimson Tide isn’t the only reason to invest here.
Like other north Alabama cities such as Birmingham and Huntsville, Tuscaloosa County meets the criteria for excellent investment criteria. Unemployment is low (2%), the population is growing by 2% annually, the median income is $58,620, the median generally affordable rent is $1,549, and the rent growth rate is 7 %, allowing investors to increase their income. Cash flow Every year. With a median home price of $205,030 and year-over-year price growth of 2%, Tuscaloosa is affordable, stable, and profitable.
by Tuscaloosa County Economic Development Authority, with a population of 266,638, the major employers in this small city are the University of Alabama (6,839), Mercedes-Benz (4,500), and DCH Regional Medical Center (3,444). All long-established companies are stable sources of employment.
dayton ohio
Known as the birthplace of aviation, Dayton, Ohio’s real estate business offers an affordable median home price of $185,000, 3% annual appreciation, affordable rents of $1,234, and major employers. One Wright-Patterson Air Force Base is getting things off the ground.of that employee 30,000 people. Other large employers in the area include Premier Health Partners (14,135 companies) and Kettering Health Network (5,029 companies). But with an unemployment rate of 3% and stagnant population growth, it ranks just below Tuscaloosa.
Lubbock, Texas
Lubbock, the 11th largest city in Texas, received an excellent ranking in one ranking. 2023 survey Selected as the city with the highest potential for real estate investment out of 500 university cities. This research is also reflected in BiggerPockets data, which shows that unemployment is low at 3%, population growth is modest (1%), median income is healthy at $59,228, and median rent is $1,342. Annual rent growth was 1%. Housing is also affordable, with a median price of $202,763, but price growth has stagnated.
Texas Tech University is the city’s largest employer.Various other employers are contributing Diverse business manufacturing, agricultural, wholesale retail, and healthcare infrastructure, including Covenant Health, United Supermarkets, Convergys, and Tyco Fire Protection Products;
But Lubbock is more than a place to invest in real estate, and that may be part of its appeal. #8 Best U.S. City for Work-Life Balance in 2022, #1 Best Overall City for New Graduates in 2023, #6 Best Midsize City Business Environment (2022). Ranked 10th best city to raise a family (2022).
Chicago, Illinois
Located in Evanston, 40 minutes from Chicago, Northwestern can both benefit and suffer from being located in a large metropolitan area. The unemployment rate is 4%. However, the home appraised value is 6%.
Of interest to investors is that although the median income is $82,914, the median home price is approximately $300,000, making it generally affordable by today’s standards. However, as a major company, Moving from large cities in the Northeast to warmer states, and remote work took hold, and Chicago felt the shock. There are few large-scale defections..
Windy City has experienced a small (-1%) population loss over the past year. Still, established universities hospitals, the financial sector, new technology companies, Chicago remains a worthy real estate investment due to its relatively affordable real estate prices compared to other major cities, in addition to the major city’s other attractions and businesses.
final thoughts
Successful college sports teams often come from successful universities and are well integrated into society. A vibrant urban economic structure So it’s no surprise that many of these cities are also good real estate investments.It’s no wonder we learn so much successful real estate The investors started their journey as students, rented rooms in the houses they owned, and built empires from there. Whether you’re an investor or looking to jump-start your child’s investment career, focusing on cities with successful college sports teams will point you in the right direction.
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Note by BiggerPockets: These are the opinions expressed by the author and do not necessarily represent the opinions of BiggerPockets.
