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5 Best College Towns for Real Estate Investors

BOSTON ( MainStreet) -- Rental properties in college towns can offer great returns to real estate investors and parents of university students alike, a Realtor.com study finds.

"College towns have a natural cycle of tenant flow," Realtor.com's Jennifer DuBois says. "You know [a student] is going to be in town for four years -- and when they move out, the next bevy of students will be moving in."

DuBois says parents who face big tuition bills might find buying a rental that their child can live in while at school will take some sting out of high college costs.

"Owning a condo that your child can live in while at school can make a college education more affordable, depending on how long you hold it and how much home prices appreciate," she says. "It certainly won't pay for an entire college education, but it's a good way to at least get some money back."

To help investors and parents find the best returns on college-area real estate, Realtor.com recently analyzed market conditions in cities hosting the top 25 national universities in U.S. News & World Report's annual school rankings.

The five cities below offer the highest rents relative to what you'd pay each month on a mortgage for a typical property in each locale.

All rental prices refer to average asking rents on Rentbits.com as of July, while monthly mortgage bills reflect what you'd pay for median-priced home advertised on Realtor.com for each city during the same period. (The study assumes you'd take out a 30-year-fixed mortgage with 20% down and today's average interest rate of about 3.6% interest rate.)
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