Buying a Second Home in a College Town

College towns have always held a unique appeal when it comes to real estate, for both families and investors. Whether you’re a parent preparing to send your child off to school, an alumnus with strong ties to your college, or an investor interested in steady rental income, buying a second home in a college town can be an attractive option. These unique communities offer a blend of cultural vibrancy, strong rental markets, and consistent housing demand that often can’t be found elsewhere.

It’s important to consider, though, that purchasing property near a college isn’t without its challenges. You’ll see a higher rate of tenant turnover, possible neighborhood restrictions, and fluctuations in the market that come with buying any property.

This guide explores the common reasons to consider buying a second home near a college and the practical steps you need to consider before purchasing real estate near university communities.

1. Common Reasons to Buy a Second Home in a College Town

Housing Your Child

One of the most common motivations for buying property in a college town is to provide housing for your child as a college student. Instead of paying rent to a landlord for four or more years, purchasing a home means that parents can build equity in an asset they own while ensuring that their child has a stable and safe living situation. This also gives parents more control over roommates, upkeep, and neighborhood safety.

Long-Term Rental Investment

Another strong consideration is using a property as a long-term rental investment. College towns typically have a consistent rental demand as students, professors, and staff arrive. Unlike vacation homes that can sit vacant for long periods, these properties are often occupied year-round. As colleges become more popular, the surrounding area can become more appealing, making the property appreciate.

Personal Use or Alumni Ties

Alumni or families with a strong connection to a university may see personal benefits in owning property nearby as a college town property investment. Alumni who return frequently for football weekends or reunions may find having a place of their own more convenient. Some buyers also may view this property as a retirement strategy for downsizing, where they can enjoy the energy of campus life without the responsibilities of a larger home. 

2. Financial Pros and Cons

Advantages

Like any real estate purchase, there’s always risk alongside the benefits. On the positive side, the demand for rental housing is often strong enough in college towns to offset the mortgage costs of a property. Even partial rental income from students or professors can significantly reduce the expense of owning a second home. Additionally, properties near a thriving university generally hold or increase in value over time, especially if enrollment is steady or growing.

Risks

The risks of this type of property are also worth considering. Student tenants may require hands-on management from a landlord, while student lifestyles often mean that properties see more wear and tear. There will also be a higher turnover of tenants as students come and go, which can be an administrative headache as you find new renters. Changes to university enrollment will also impact demand and rental rates, particularly if those start to decline.

3. Understand Local Real Estate Trends

Before moving forward, it’s essential to research the local market. Every college town is different—some areas may have limited housing inventory and high competition, while others may have more affordable options. Start by analyzing property values and trends over the last several years. Evaluate which neighborhoods are most attractive to students and what type of home your budget can realistically stretch to. Work with an experienced agent who can advise you on common lease structures and rental rates.

4. Rental Management Considerations

One of the buyers' most significant decisions is managing a property or hiring a professional management company. Self-management may save money, but it requires time and energy, and it is often necessary to be close to the property should any issues arise. Parents may find management easier if their child lives on the property since they have more emotional investment.

On the other hand, investors or those who live further away may find more benefit in working with a management company. They’ll handle marketing, tenant screening, rent collection, and compliance with the landlord-tenant agreement. While these services come at a cost (around 8-12% of the monthly rent), many owners view this as money well spent for increased peace of mind. Be sure to also budget for regular maintenance on the property and cleanings between tenants.

5. Zoning and HOA Restrictions

Before signing a purchase agreement, buyers should carefully review any zoning restrictions or homeowner association (HOA) rules. Some college towns have regulations limiting the number of unrelated tenants occupying a single home, which are designed to prevent overcrowding in residential neighborhoods but can impact your rental potential.

Some HOAs and zoning laws restrict all short-term rentals to prevent Airbnbs and similar property structures. It’s crucial to research whether the property you want falls under any of these restrictions before purchasing. 

6. Tax and Financing Considerations

Another critical step is determining how the property will be classified for tax and financing purposes. If the home is used primarily by your own family, it may qualify as a second residence. It may be considered an investment property if it’s rented out for most of the year. This distinction will affect your mortgage rate, down payment, and eligibility for certain tax deductions.

Financing requirements for investment properties are often stricter, with larger down payment requirements and higher interest rates. Lenders also factor in the potential rental income on your mortgage application. Talk to a lender and tax professional before proceeding with your house hunt.

 

 

7. How CS Mortgage Can Help

At CS Bank, we know that navigating a purchase in a college town can be complex. Our mortgage team specializes in helping buyers explore second home financing options, whether you’re purchasing for your own student, as a long-term rental, or for your personal use. We also understand the nuances of different regional markets, giving you an advantage when weighing your choices.

Our lenders provide competitive rates and flexible options tailored to your needs. Beyond financing, we can connect you with trusted local resources, from real estate agents to property managers, so that you can feel confident every step. When you partner with CS Mortgage, you don’t only get a loan—you’ll gain a dedicated team to help you make your second home purchase a success.

Making a Decision on a Second Home

Buying a second home in a college town can be both a practical housing solution and a wise long-term investment. Parents, alumni, and investors alike are drawn to the consistent demand for housing and these communities' unique lifestyle.

Doing your homework, seeking local expertise, and carefully planning your finances will ensure that you make the right choice that’s aligned with your goals. Contact CS Bank today to learn more about financing options for second homes and investment properties.