| Investors frustrated by low cap rates and high unit prices in the apartment sector may find more attractive opportunities in the growing market for rental properties targeted at the college student population. While the businesses are similar in many respects, acquisition cap rates for institutional quality student housing generally are higher than comparable apartment yields and positive cash-on-cash returns remain the norm. Moreover, the student market is less prone to demand cyclicality and effective rents are biased upward in harmony with dormitory room and board rates. Consequently, student housing investors often enjoy greater, more consistent cash flows while positioning themselves to benefit from prospective cap rate convergence as market transparency improves. The following report examines some of the larger demographic and investment considerations for prospective student housing investors. |
