AS THE BACK-TO-SCHOOL season gets under way, you may be shopping around for new investments for your portfolio. Real estate is a solid diversification tool and student housing is an under-the-radar sector to consider this fall.
“The student housing real estate investment market is virtually untapped,” says Jay Morrison, CEO of the Tulsa Real Estate Fund. An aura of exclusivity surrounds student housing investments but it’s a sector that’s far from fully realized, “which means there’s plenty of room for opportunity for new investors in this market.”
As a smaller niche within the commercial real estate market, student housing has long been the domain of institutional investors and people with a high net worth.
“On the private side, we’re seeing a tremendous amount of investment in that asset class,” says Randy Hubschmidt, manager partner at Fortis Wealth, while it’s traditionally been more difficult for investors to get access via the public markets.
The barriers to entry for the everyday investor are beginning to crumble, however. If you’re ready to expand your real estate investment horizons, it’s time to get schooled on the benefits of student housing.
It earns good marks for consistency. Student housing offers a degree of stability that isn’t always present in other real estate sectors, particularly during periods of market volatility.
“One of the main advantages is consistency,” Morrison says. “Demand for student housing is always going to be there, which means year after year, there will always be viable tenants for your investment.”
That tends to hold true even when the economy stutters.
“Student housing tends to be less economically sensitive, relative to other sectors, due to the nature of the industry,” says Beth Mallette, real estate series fund manager at Manning & Napier Advisors. “During economic downturns, enrollment tends to remain steady or may even rise due to fewer employment opportunities, which typically leads to growth in college and university enrollment.”
That’s reassuring if you’re worried about turbulence in the market or the possibility of a recession. Student housing can offer predictability that other sectors may lack.