Growth in the off-campus student housing market creates massive opportunities for property management companies. College enrollment is increasing for the first time since the pandemic, driving off-campus student housing revenue that outpaces multifamily rents in the same markets.
Many property managers are looking to enter this market for the first time. New entrants must understand one thing: there is no plug-and-play option here. Student housing requires a fundamental shift in marketing, leasing, and operating your units. Property managers must consider fundamental operational changes and take specific steps before testing this market.
All-in or testing the waters? Use data to create a strategy
Before deciding whether and how to enter the student housing market, you must understand the local market opportunities.
Data is a crucial part of assessing the market opportunity. Viewing university enrollment trends, advertised rent and inventory at comparable properties, and historical leasing data on your properties will allow you to make the most informed decisions. From there, you can develop a strategy that starts with a fundamental question: are you going all in or testing the waters?
Going all in involves risk because it requires rethinking many marketing and operational factors. However, with enrollment data to back it up in the right market, there is a big incentive to capitalize on the opportunity.
Testing the waters with a smaller subset of units is also an option, but it has limitations. For example, parents are often less likely to want their children to share an apartment building with conventional residents. Single-family homes or small multifamily properties might be a safer way to test out student housing. If you are just testing the waters, have a plan for reverting to your conventional residential strategy if you’re not seeing results.
The high-stakes annual cycle requires operational changes
The major difference between conventional and student housing is that student housing properties are pre-leased a year in advance. This timeline creates two crucial, high-stakes operational milestones that property managers must plan for quickly turning around properties in August and pre-leasing for the following year.
Property managers have a very short window during which they must turn units around for new students, including dealing with any damage done by previous residents, cleaning the units, and replacing furniture. Securing vendors earlier in the year is important to ensure you have a trusted team to meet the tight timeline before moving in.
To navigate these timelines, property managers need to understand student housing’s annual cycle and create a strategy that accounts for what else is happening in their market. Without the right data and tools at their disposal when pre-leasing starts, there’s a lot of room for error, inefficiency, and lost ROI.
Marketing to student renters and their parents
Parent involvement in student housing, and their high expectations, significantly impacts operations.
Resident experience is a priority in student housing and may look different than in conventional units. For example, student-focused amenities like study rooms, transportation to and from campus, and social events for student residents are sought-after.
Since most students have little credit history, parents often act as guarantors on a student housing lease. Your leasing team may need to change the screening process to account for this. Ensure the right technology is in place to manage a guarantor or co-signer.
Finally, marketing to students also requires a mindset shift. I’ve also spoken with first-time student housing operators who are learning to sell on Instagram and other new platforms. Think about the best way to attract and engage with a younger audience on digital-first channels.
Flexible technology can minimize risk
Whether you’re going all in on the student housing market or just testing the waters, a flexible software platform is a crucial element of success. Among the most important factors is having a software solution that enables you to understand the growth opportunities in your market and provides flexibility in how your assets are utilized, be it conventional, affordable, or student housing. Property managers must remain agile and able to pivot between different uses and lease structures for their units.
There is plenty of opportunity in the student housing market. However, leveraging this opportunity to maximize the potential of your units depends on understanding the complex student housing market and making necessary operational changes. By creating a data-backed strategy, learning how to market to students (and their parents), preparing for the annual cycle, and using flexible technology, property managers will be best positioned to enter this market while minimizing risk.
Beth Gilbert is the Senior Director of Product Management at AppFolio.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
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