Appeal of large student housing?

[Michael Le]

So I saw two articles this morning both about large student housing deals. One was specific to a deal near the University of Houston recently changing hands and another more general one talking about how the deal volume for student housing is near record numbers.

I have had a student housing deal come across my plate previously and it was actually one where the owner had tried to convert from conventional MFH to student housing, was not successful, and was in the process of converting back. Our lender was very specific that if this was a student housing deal then the loan would have a max leverage of 75% and higher capex reserve requirements. And the killer was that you would need to have at least 3 previous student housing deal experience (preferably 5), similar to how Fannie loans requires previous Fannie experience. And our property management company said it is harder to manage because it is by-the-room leasing which requires specialized software and also requires higher deposits due to higher expected damaged and also most of the leases expire at the same time around June/July.

Additionally I was told that the you need to provide more amenities and the ones you provide have to be of larger quantity. For example, your pool or club house, most properties you might expect only 10% of your tenants to use them and only on the weekends. Students are more social so they will use more often so you need a larger pool.

So my question basically is, what is the appeal of student housing when there are all these restrictions and limitations? Is it the 'guaranteed' money because the parents are co-signing?