This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Good Times for College-Town Landlords

Stocks in this article: FISV ACC

BOSTON ( TheStreet) -- While the economic recession is bad news for the real estate industry, it's a boon for prospective college-town landlords.

Housing prices have fallen by half in some areas, mortgage rates have sunk to a record low, while university enrollment is surging with people going back to school in the wake of job losses. That has led to a dearth in student housing, which means it's a great time to buy low and rent high.

"An investor is certainly more likely to profit from a rental property than what was possible two to three years ago," says David Stiff, vice president of quantitative analysis at Fiserv (FISV), which publishes the Case-Shiller housing index. "Home prices have dropped substantially in many markets. But absorption rates seem to be stabilizing, in part, because the surge in foreclosures has pushed many households into the rental housing market."

Supply and demand is in the landlord's favor. Freshman enrollment at postsecondary institutions in the U.S. surged by 144,000 students from the fall of 2007 to the fall of 2008, the biggest boom in 40 years, according to the Pew Research Center. The freshmen of 2008 are now entering their junior years -- and junior year is often when students start living off campus.

For a prospective landlord, it makes sense to seek out college towns where prices are especially low. In Columbus, home of Ohio State University, housing prices have dropped 10% in the past five years, according to Case-Shiller. In San Luis Obispo, home of California Polytechnic Institute, prices have plunged 31% since 2007. In Tallahassee, home of Florida State University, prices have fallen 16% in the past three years, and are expected to go down another 1.5% in the next year. In Gainesville, home of the University of Florida, home prices are down 22% in the past three years and are expected to drop another 15% between the first quarter of this year and next.

Meanwhile, student-housing development and management companies seem to be holding steady. American Campus Communities (ACC), which operates 53 student-filled properties, booked second-quarter revenue of $76.7 million this year, up 7.6% from $71.3 million a year earlier.

"We've been able to maintain high occupancies and growth even through the downturn," says Michael Orsak, vice president of acquisitions at Campus Advantage, an Austin, Texas-based real estate firm that manages off-campus housing near 37 universities across the country. "And, in general, for the most part, rent per square foot for a college student is higher than the market value. It is going to cost you a little more for upkeep, but it is going to give you a better return."

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs