Many seasoned investors consider college rentals a real estate gold mine for both long- and short-term leases. Secure a rental apartment near a coveted institute of higher learning, and you can almost guarantee your income each year. With parents willing to safeguard the leases, even when other markets cool, the demand for student housing is such that landlords can anticipate uninterrupted revenue.
If you’re wondering which college towns to invest in, don’t think purely about the housing cost and cash flow. There are numerous other factors to consider.
Location is one. Often, college campuses are surrounded by sketchy neighborhoods, which can make for a bad rental experience.
Taking into account the overall character of the surrounding area is paramount. Is the local economy strong? What are the enrollment stats? Are college rental properties reasonably priced?
If the deduction process seems daunting, RentCafe.com has analyzed 244 college towns and compiled a best-of list for small landlords to take note.
Why College Towns Are Still Resilient in 2026
Before diving into the rankings, let’s widen the lens and examine why college markets are a good place to invest in 2026. As with many rental communities, a shortage of housing is driving up occupancy, enrollment remains high, and federal funding is driving on-campus projects, according to a recent report by Berkadia, with Texas and the Midwest enjoying the greatest rental gains.
This contrasts with the rest of the U.S. housing market, where the balance of power has started to shift back to buyers amid softening rents. Investors, meanwhile, have identified affordability and quality of life as primary drivers of investment.
College towns fit the narrative. According to RentCafe.com’s ranking of the best college towns in the U.S. for 2026, Bozeman, Montana, leads the list for the third consecutive year, followed by a mix of Western and Midwestern communities anchored by their local universities.
Bozeman, Montana, Is Raising the Bar for College Towns
Bozeman is on a tear in the RentCafe rankings. A persistently high performer and home of Montana State University, Bozeman’s rise has made national headlines, with the FOX-owned LiveNow reporting that the city’s access to nature, low crime, and a student-friendly cost of living make it an ideal college town. However, it’s not a place for rookie investors, as the average home value, according to Zillow, is over $715,000.
For small investors, those factors, helped by national headlines, boost the occupancy rate, as RentCafe points out, which, coupled with the university’s growth, has propelled Bozeman up the rankings and made local landlords who have owned in the city for a while flush with cash.
The Midwest and the South Generate the Most Profit
However, larger investors usually choose vast apartment complexes to park their cash, leaving a gap in the market for astute mom-and-pop investors to buy smaller single-family and multifamily homes off-campus in nearby neighborhoods, where purchase prices are more affordable.
According to RentCafe’s list, more affordable housing is likely to be found around several colleges in the Midwest and South, such as:
- Clemson, South Carolina (Clemson University): Average home price $399,130
- Laramie, Wyoming (University of Wyoming): Average home price $363,855
- Gainesville, Florida (University of Florida): Average home price $293,024
- Athens, Ohio (Ohio University-Main Campus): Average home price $237,159
- East Lansing, Michigan (Michigan State University): Average home price $302,521
RentCafe’s exhaustive list of colleges covers every region and price point in the country. It’s a good starting point for investors, but not a definitive guide. Once cross-referenced with other reports, such as WalletHub’s 2026 Best College Towns and Cities study, a clearer picture emerges.
WalletHub analyst Chip Lupo says:
“Towns with a low cost of living, plenty of activities, and large student populations can make your college experience a lot less stressful and a lot more enjoyable. In addition, cities with a great economic environment can make it easier to get a job during or immediately after college.”
Investing in College Towns for Long-Term Income
GoBankingRates’ October report highlighted five college towns and cities where landlords could look to generate reliable, long-term passive income from their investments. The personal finance site uses stats from the Education Data Initiative and the Mortgage Research Network, which identified where buying and keeping a property for 10 years would bring the best returns.
Top of the list were institutions where room and board ran high while home prices were relatively low. The top spot went to Philadelphia (Temple University), where the report attributed the following stats:
- Median home value: $234,799
- Three-year cost to own: $21,162
- Three-year cost of room and board: $50,904
- 10-year profit: $73,030
The other four college towns on the list were:
- Huntington, West Virginia (Marshall University)
- Newark, Delaware (University of Delaware)
- Tuscaloosa, Alabama (University of Alabama)
- Memphis, Tennessee (University of Memphis)
Best College Towns to Buy a Short-Term Rental Property
A recent AirDNA report crunched the numbers to find college towns where short-term rentals perform best and found that the best performers were those with affordable prices and the highest campus-driven revenue potential, which worked best with STRs located close to the campus.
The top five markets were:
- South Bend, Indiana (University of Notre Dame)
- Lansing/East Lansing, Michigan (Michigan State University)
- Syracuse, New York (Syracuse University)
- Columbia, South Carolina (University of South Carolina)
- Champaign/Urbana, Illinois (University of Illinois/Urbana-Champaign)
Final Thoughts
One of the main advantages of investing in college rentals is that students often pay by the room, which turbocharges rental income on yearly leases. It can also mean headaches in chasing up rents.
From past experience, I’ve found that there are usually decent tenants who pay on time and bad eggs who are irresponsible, entitled, and think they are doing you a favor by renting your apartment. That’s where a good property manager and parental guarantees come in handy. Liability clauses and strict house rules regarding rent collection should also be in the lease and equally enforced, as should the high security deposits that will be forfeited for damage or eviction. As a landlord, you need to bring the pain; otherwise, your rental will turn into a scene from Neighbors or Animal House.
That said, when handled correctly in a high-demand area, student housing can be the gift that keeps on giving. As a fellow investor once told me when I bought my first student rental near a highly respected university, “This place isn’t going anywhere.”
Discussion about this post