5 States Where College Towns Are Starving for Rentals

[Cole Bossert]

If you want reliable demand and less competition, college towns are a smart play — especially in states where enrollment is growing faster than housing supply.

Here are 5 states where student housing shortages = investor opportunity:

1. North Carolina

• College towns like Boone and Chapel Hill are underbuilt

• High out-of-state enrollment + limited development

• Landlord-friendly, with strong long-term growth

2. Georgia

• Schools like UGA drive big rental demand

• Lots of small towns with minimal rental stock

• Strong pre-leasing activity = low vacancy risk

3. Indiana

• Low home prices + steady student turnover

• Towns like Bloomington rely on private landlords

• Easy eviction process and solid cash flow

4. Alabama

• Student-heavy towns with aging housing stock

• High rent premiums near campus

• Low taxes and fast legal process for landlords

5. Colorado

• Schools like CSU and CU Boulder face housing caps

• Students and young pros compete for limited supply

• High rents support house hacking or co-living plays

Where else are college towns still flying under the radar?

[Denise Evans]

At least in Tuscaloosa, student housing brings higher rents. Yes, they are often rough on the property but regular inspection visits and immediate consequences keep that to a minimum. Also neglect-proof finishes like LVT flooring, quartz countertops, one-piece shower and/or bath enclosures and painted cabinets.  Plan on changing out HVAC filters yourself and doing pest control yourself. 

While they each pay rent by the bedroom, make sure the lease includes joint and several liability, which means everybody is liable for the whole property rent, not just their portion. If one student defaults, the others make that one pay or they ante up the difference.

Parents all guarantee the leases, so there is almost no risk of default.  Most landlords make some portion of the security deposit non-refundable as a turnover fee.  

If you are a good landlord, they will refer their friends and classmates to you and you'll never have any vacancies. A friend of mine specialized in student housing. He said their last memory of their landlord is the "lasting memory." He inspected monthly and stayed on top of them to fix minor things and clean things or pay to have it done, immediately. But, he always refunded the security deposit, in full, 5 days after lease end, unless they completely trashed the place. He charged market rents and always had a waiting list for his units.

Again, I speak only for Tuscaloosa, but historically student housing sold on lower capitalization rates than regular rentals. I'm making up these numbers, because this post will be online for a long time but cap rates will change, so don't takes these as current cap rates. A SFR in a family part of town might have monthly rent of $3,000 and an annual Net Operating Income (after expenses) of $27,000 and might sell on a 7-cap for $385,700 Student housing with the same numbers might sell on a 6-cap for $450,000.

The investment strategy is to buy cheaply on the fringes of the path of student housing growth, and then wait a year or two until the area turns to a student housing area.