Golden, Colorado, a picturesque city tucked away in the foothills of the Rocky Mountains, is renowned for its spectacular natural beauty, friendly community, and being home to the esteemed Colorado School of Mines.
However, this growing city is more than just a haven for outdoor enthusiasts and engineering students; it’s a burgeoning market for real estate, particularly in student housing. The market’s potential isn’t without its challenges.
From fluctuating rental rates and zoning restrictions to seasonal demand and evolving student needs, the landscape is ever-changing. Consequently, understanding the pros and cons of the student housing market in Golden is crucial for investors, students, and their families, for making informed decisions.
In this article, we will delve into the nitty-gritty of Golden’s student housing market, aiming to shed light on what makes this segment both appealing and challenging for various stakeholders.
Whether you’re an investor in search of your next lucrative project, a student hunting for a convenient and affordable place to live, or a parent eager to secure a safe and stable environment for your scholar, read on to explore the multifaceted world of student housing in Golden, CO.
Pros of the Student Housing Market in Golden, CO
1. High Rental Demand
The local colleges play a critical role in the housing landscape. While institutions often provide accommodations for some first- and second-year students, most students seek off-campus housing. This consistent, durable demand for student housing in college towns like Golden, CO, creates an appealing prospect for investors, particularly those entering the market.
One of the distinct advantages of investing in student housing lies in the proximity to the campus. Unlike conventional residential neighborhoods, where popularity and rents may fluctuate, student housing enjoys unique stability. The closer a property is to the campus, the higher its value. This aspect remains remarkably resilient and is unlikely to undergo significant changes.
This inherent value proposition ensures that investments in student housing tend to be profitable, even when premium prices and full real estate commission are factored in. The lucrative nature of student housing investment is further enhanced by the consistent demand and the potential for attractive returns, especially in well-sought college towns like Golden, CO.
2. Higher Rents
In college towns, the housing dynamics frequently drive higher rental costs. Golden’s median rent for all property types and bedrooms is $2,623, which marks a significant $302 increase over the past year, underscoring rising demand for housing options.
At the time of writing htis article, Golden’s rent is 25% higher than the national median, emphasizing its appeal as a favored residential destination. Frequent turnovers and vacancies are common, given that student occupants typically subject properties to more wear and tear.
3. Opportunity for Value-Adding Strategies
Implementing strategic improvements in student housing properties offers a dual benefit. It enables investors to command higher rental rates and attract a larger tenant pool, ultimately increasing the property’s overall value. These enhancements, from modern amenities to enhanced security and sustainable practices, cater directly to student preferences.
Moreover, investing in proximity to campus and essential amenities adds significant value, enhancing the property’s marketability. As a result, these strategic improvements enhance the tenant experience and prove to be a wise investment strategy that yields both financial gains and increased property value.
Cons of Investing in the Student Housing Market in Golden, Co
Every investment carries inherent risks, and knowing about the potential drawbacks of investing in student housing empowers you to make well-informed decisions. Here are several key disadvantages associated with investing in student housing.
1. Greater Chances of Wear and Tear
While student housing is a robust investment option, it’s essential to acknowledge that college students can subject properties to substantial wear. Student housing often ages rapidly due to various reasons, from social gatherings to scenarios where four bedrooms accommodate six individuals.
Secondly, college students aren’t typically known for being meticulous about cleanliness. Consequently, issues like mold, leaks, or pest infestations can swiftly escalate, potentially resulting in more significant and lasting damage.
2. High Tenant Turnover
Having stable, long-term tenants is valuable for landlords because preparing a property for new renters takes time and money. When tenants leave, there’s a period of no income, and finding new tenants can be tricky, as they might be difficult or not take care of the property.
In student housing, tenants change almost every year or two. This means landlords need to quickly fix the place and find new tenants when the old ones leave. Finding the right tenants can be challenging, especially if you’re new to investing. It’s important to be ready for these frequent changes.
3. Seasonal Demand
Investing in student housing means aligning with the academic calendar, translating to potential vacancies during off-seasons. If your property becomes unoccupied when students are away, you might face a prolonged vacancy until their return.
Additionally, managing summer subleases can be challenging, as short-term tenants may not always be dependable. The unpredictability stemming from these demand fluctuations could be unsettling for novice investors.
Experienced proprietors in student housing emphasize the pronounced seasonal demand cycle. To avoid extended vacancies, securing tenants before the school year commences is essential.
Once classes begin, the likelihood of students seeking housing diminishes, making timely rental arrangements paramount. Furthermore, it’s worth noting that non-student renters generally display limited interest in residing within or close to student-centric neighborhoods.
4. Reliance on the Educational Institution
The success of your student housing investment is closely intertwined with the well-being of the nearby college or university. As the educational institution prospers, your property also flourishes. Conversely, if the university encounters setbacks or downsizing, your investment is prone to face challenges, regardless of the property’s characteristics.
Therefore, it is imperative to ensure that the academic entity you associate your investment with demonstrates robustness, stability, and reliability. This step is critical in securing the positive trajectory of your investment.
Tips for Investing in the Student Housing Market in Golden, CO
Employing specific strategies can minimize the risks linked to renting to students. Keep these suggestions in mind to enhance the potential of your student housing investment.
Conduct Comprehensive Market Research
Investing in student housing is a significant financial commitment, with tenant occupancy being the linchpin for profitability. Conduct thorough market research before purchasing a student housing property to comprehend market trends and tenant preferences.
Evaluate local competition to discern the features that draw students to their units. While college students might have limited budgets, they could allocate extra funds for specific amenities like on-site laundry facilities, complimentary Wi-Fi, and proximity to affordable dining, transportation hubs, or shopping centers.
Consider Hiring a Property Manager
Enhancing the profitability of your student housing investment becomes more achievable through the assistance of a property manager. As an investor, juggling tasks like constantly reviewing applications, screening tenants, conducting property inspections, addressing tenant concerns, and managing maintenance can be time-consuming.
Delegating these responsibilities to a property manager can save time and ensure a thorough approach to property care. It can also allow you to manage your investments more efficiently.
Laurel Property Services Inc. can be your steadfast property management partner for investments in Golden, Wheat Ridge, Morrison, Lakewood, Arvada, and Genesee in Colorado. Our expertise empowers investors in making sound decisions in the student housing market, optimizing profitability.
Contact us at Laurel Property Services to navigate the nuances of student housing investment and capitalize on market opportunities.
