Real estate is a reliable way to make extra income and earn a return on your initial investment, but your choice in neighborhoods will have a massive impact on your success. Different cities and regions offer different perks for your investment, such as more attractiveness to incoming tenants and a greater potential for appreciation, but you’ll need to consider the advantages and disadvantages carefully before you make a purchasing decision.

One of the most interesting opportunities for real estate investment is in apartments or housing near college campuses. Near-college real estate can be a potentially lucrative investment—so long as you know what you’re getting into. Using a location-specific search site (such as Gator Rentals for Gainesville or Smart City Living for Dallas or Austin) can help you get a feel for the pricing and accommodations of your specific area, but the advantages and disadvantages of near-college real estate are somewhat universal.

Advantages of Near-College Real Estate

1. A Lively Area

Colleges are full of young people and tend to be highly populated. This energetic young crowd often attracts a number of amenities and accommodations, including restaurants, gyms, stores, entertainment, and even businesses. These features instantly make your near-campus housing even more attractive—regardless of whether the tenants will be students attending the university. They also make your investment more secure since they’ll offer more opportunities for the tenants opting to move in.

2. Large Pool of Prospective Tenants

Because universities generally attract thousands of new students every year, your tenant pool is going to be quite large. These students often temporarily inflate the existing population of the city, potentially doubling or even tripling the sheer number of potential renters you could accommodate.

3. Climbing, Stable Rent Prices

Rent prices in areas near universities tend to be stable, with an inclination to grow, so long as the university remains open and thriving. You won’t have to worry about much volatility since the desire for housing will depend strongly on the university’s existence. Universities don’t often fluctuate in and out of existence, so you can rest assured you’ll be able to charge a consistent price—and hopefully become cash flow positive, even with a significant investment.

4. Less Vacancy Time

For the most part, you won’t face extended periods of vacancy with your property because you’ll see a relatively constant stream of new people trickling in. A new wave of college freshmen will trickle in every year and may join mid-semester, so you’ll never be far from a fresh influx of potential renters. Less vacancy time means you’ll collect rent more consistently, and you’ll ultimately be more profitable.

5. Value Appreciation

Though not a rule set in stone, the value of property in college towns tends to appreciate strongly. Over time, as universities become more entrenched in the local economy, more businesses will spring up, more students will be attracted to the city, and more people will stick around after graduating to help the city grow even further. It’s a self-sustaining economic cycle that helps the area to improve over time, adding value to your property after even a few years.

Disadvantages of Near-College Real Estate

1. Tenant Turnover

Some student tenants will want to remain in the area all year long, but most of them will return “home” during summer or when classes aren’t in season. That means you’ll likely see higher rates of tenant turnover, even if your total vacancy time is lower than usual.

2. Off-Season Valleys

During summer months and other low periods of attendance, you’re going to see low periods of tenant interest. That means you’ll experience significant volatility in your incoming revenue, so make sure you can tolerate it in your monthly budget.

3. Potential for Damage

Stereotypes aside, college students tend to be energetic, with lots of free time, and they enjoy gathering for recreational activities. This makes your property vulnerable to damage resulting from said activities. Requesting a higher security deposit may protect you against this potential disadvantage.

Near-college real estate offers many perks, but it isn’t a perfect location—there’s no such thing. As long as you’re aware of the potential disadvantages and can compensate for them with your choice in property, purchase price, rent prices, and ongoing management, you can likely find a highly profitable deal in your chosen area. Keep your eyes peeled for a good deal and remember that it takes patience and timing to build wealth through real estate—no matter what kinds of properties you choose.