I'm currently looking to buy a 4/2 SFM and rent it to university students.

@Annette Radvansky PM's almost universally hold security deposits in their trust account.

Both are located in Lawrenceville, NJ within one mile of Rider University. 

@Eric DeVito - Like most questions in real estate (and life), there is no universal answer to which is better.

@Bryan Kunka, a couple areas that I like which you didn't list are University district, which are mostly higher end flips, min $100k+, with the exception of a few blocks near 6 mile and Livernois, Bagley (NW corner of 6mile and Livernois), buy around $20-$25, ARV ~50k, and are selling. 

I actually got to talk to a seasoned investor and he said the deal seemed good, but there was probably a catch.After doing some research I discovered that University has recently changed their housing to make it required students live on campus for four years.

Then you have to manage the property for an entire month in return for that management fee and this is almost universally billed in advance. 

Many students are shown on TV as spell bees and high school grads mostly attend four year universities.

I'm thinking of getting into both house flipping and rentals part time when I leave university/when I have enough time off during university (such as during the summer possibly).

This adds value and you probably know that Bridgeport has higher values in general than Clarksburg and Morgantown has some of the highest values in the state because of the hospitals and University.