A Smart Investment: College Towns
Author: Kyle J. Leigh
Many of us are still looking for that next great investment. The next Apple. The next Facebook. As we’ve all come to know, the real estate gains that were made in the past couple of decades will not make a dramatic comeback in the foreseeable future. Yet, many people still believe that a solid return on investment can be made in residential real estate. Let me explain:
I’m a two-time University of Denver graduate. Believe me – I’ve spent immense amounts of time lurking around the DU neighborhood. From the beginning, I rightly understood how great of an investment a rental home in this neighborhood could potentially be. Think about it. You have a consistently replenishing tenant base to fill your four-bedroom house. Universities like DU don’t tend to disappear. These students also often sign two-year leases at a time. Why? Because the cost of DU’s own housing increases every year, and they don’t want to get stuck without an off-campus residence. The demand is that great. Did I mention that the university charges roughly $1,200 per person! In students’ eyes, renting a house is a steal.
So, what did I do? Well, I bought at house on Gilpin just two blocks from the university. It’s a four-bedroom, two-bathroom bungalow right in the middle of the bustling Evanston neighborhood. You have the original Chipotle just a few houses down, the legendary Kaladi Brothers Coffee shop, and a number of local bar-and-grills. Within walking distance to Porter Hospital and the historic Old South Pearl Street, it’s the prime locale for both students and young professions.
And what ROI am I experiencing? If I hold onto the property for ten years, I’ll see a CAP rate of nearly 14%. Not bad considering it already creates a generous cash flow even with a conventional loan debt service. I’m not saying that everyone can experience this same return, but there are many roads to the same destination.
As LeVar Burton said, “But don’t take my word for it.” Have a look at this article in the Wall Street Journal.
“College markets have long been one of the real estate industry best-kept secrets,” says Jim Gillespie, chief executive of Coldwell Banker Real Estate LLC. “Real estate professionals have been investing in college towns for years, often purchasing homes for their children who are attending school.”
Let us know if we can help!
1250 South Garfield Street
Denver, Colorado 80210
Madison & Company Properties – Denver’s Premier Boutique Real Estate firm in Wash Park
www.madisonprops.com
303-771-3850
