When we think about properties with more than one household living under one roof, we’re led to believe it is a multifamily building. And since student housing involves multiple students living together, the question of “Is student housing considered multifamily?” arises.
As property management, we need to understand the distinction between these types of housing. In this blog, we will be exploring what student housing actually is and if it can be considered multifamily.
Understanding Multifamily Vs Student Housing
The term “multifamily” typically includes different types of housing such as apartment complexes, duplexes, and other residential properties that are designed to accommodate multiple families or individuals. However, the classification of student housing differs from this description, and even though it may seem like it can be classified as multifamily, there is a key difference.
Student housing is a unique segment within the real estate market. These types of housing are specifically created to meet the needs of college or university students. They take care of unique requirements such as by offering close proximity to the campus, pre-furnished living spaces, and other amenities that suit a student’s lifestyle.
The Distinctions Between Multifamily and Student Housing
Real Estate Category
Student Housing – Student housing is considered to be commercial real estate. Commercial real estate refers to any type of business-related property. Student housing properties are generally owned and operated by private companies, which are then rented to students attending those colleges or universities.
Multifamily – A multifamily property, on the other hand, is considered to be a residential real estate property. This refers to any property that is used primarily for living purposes.
The Target Demographic
Student Housing – These properties are primarily targeted at college or university students and are not used for residential or business purposes.
Multifamily – Doesn’t really have a target demographic as it caters to all people including families, professionals, and retirees. This type of housing is often seen as a more affordable option than a single-family home. It is also a popular choice among people who want to live in a close-knit community.
How The Lease Is Structured
Student Housing – Student housing is provided on shorter-term leases that are determined by the academic calendar and the students’ schedules. Students cannot extend their lease beyond their university years.
Multifamily – Multifamily offers both short and long-term leases. They are generally meant for individuals who are looking for (semi-) permanent housing. There are no restrictions when it comes to how long a person wants to lease the property.
Provided Amenities and Services
Student Housing – These properties are entirely dedicated to providing the amenities that support student life. Study lounges, computer labs, and communal spaces are what you would typically get with conventional student housing.
Multifamily – These properties offer a more diverse range of amenities that appeal to a broader audience. Fitness centers, swimming pools, and common areas are some examples.
Location and Proximity
Student Housing – Student housing is always going to be located very close to the associated educational institution. This is done to ensure easy access to the student’s classes, libraries, and campus events. You will rarely find student housing located a far distance away from the college.
Multifamily – Multifamily properties can be found anywhere where residential real estate is available. From urban areas and suburban neighborhoods to rural settings, these properties cater to the wider needs of the larger population.
Pre-Furnished Units
Student Housing – Most often, the college or university will provide fully furnished units to each student. Students are only going to use those units for a short period of time, so it wouldn’t make sense for the college to expect students to furnish their units every year.
Multifamily – Multifamily properties can be found both furnished and unfurnished. This will depend on the location, price, and requirements of the tenants. Unfurnished properties are generally cheaper than furnished ones.
So Is Student Housing Considered Multifamily?
Having looked at the distinctions between the two, we can see that while student housing shares some similarities with multifamily buildings, it occupies a pretty unique niche within the broader housing landscape. Student housing is created specifically to satisfy the unique needs and preferences of college and university students. In contrast, multifamily housing encompasses a much wider range of residential living spaces. On top of that, multifamily is residential real estate, putting it in a different league than commercial real estate properties.
Therefore, student housing cannot be considered a multifamily property. However, this doesn’t mean that investing in these types of properties is a bad idea.
Why Invest In Student Housing?
- High demand – In every generation, there are going to be new students. This means that demand is high and rising every year. There is always going to be a need for housing for college students, making it a lucrative and sustainable real estate market.
- Short-term leases – Student leases generally last for one academic year. This in turn allows investors to turn over their units more frequently than with other types of real estate, meaning you are able to keep your investment liquid on an annual basis. This would somewhat reduce the amount of risk involved.
- Easier to Scale – Investors can easily expand or contract the number of units in student housing based on the demand at that time. If there is a rising demand, more units can be created. If there is a decrease, a portion of the units can be rented out to other tenants.
Conclusion
While student housing may not be considered multifamily, there are still a lot of benefits to investing in that market. As an investor, you should conduct your own research in your local market and identify if there is potential there to invest!
