San Antonio—In multifamily, student housing remains one of the most popular—and lucrative—real estate markets. This is certainly proving to be the case for Lynd Student Living, a division of Lynd, a national real estate firm located in Miami and San Antonio. In fact, the division was recently launched with a $100 million student housing portfolio.
A. David Lynd, president and CEO of Lynd, talks to MHN about the tricks of the trade for a successful student housing community.
MHN: How did you get involved with student housing?
Lynd: We’ve operated student housing for probably about 10 years. Our first purchase was in Denton, Texas, in the University of North Texas campus area. It was just a timely purchase at the time, so we kind of got into student housing by default.
After getting our feet wet with that acquisition and really understanding multifamily or student housing, we started saying, “Hey, there’s really a lot of benefits to student housing if you know what you’re doing.” It’s a specialized business, the margin for error is a lot more slim and if you miss a leasing season or hurt your reputation, every year you’re pitching a new consumer group because there’s new college kids coming in, and so you have to continue to sell your brand every year. So we saw the space, we liked the opportunity, we liked the fact that the need to go to college and have a college degree is just a necessary thing in today’s world to compete.
Every major university continues to experience growth upon growth, so we liked the demographics behind student housing. With all the states facing budget issues, the last thing they’re going to be doing in the next several years is spending money on facilities, so they’re going to be looking to the private sector to provide housing options for students.
So we saw all these different aspects of student housing and liked the sector, and then as we were getting in the distressed note-buying space, we saw more and more and more distressed student housing deals. We just kept acquiring, and acquiring and acquiring, and at that point we got to roughly $100 million and 9,000+ beds. We said, “You know what, we really need to formalize this Lynd Student Living brand and get out there with it and start running it like the specialty business it is.” That was the decision to go ahead and create the Lynd Student Living division and to make a concerted effort to really grow in the space long term.
MHN: You just mentioned, “you have to continue to sell your brand.” How do you do that?
Lynd: You’re selling your brand, and student housing is very unique. There are different social events that work in student housing that don’t work for regular housing, things that are formed around mixer events, parties, pool, social activities that allow college kids to be college kids. We spend a lot of time making sure that the properties are clean and the maintenance is done in a timely manner, because the service needs to be good. The amenities need to be on the cutting edge. You’re dealing with the newest, freshest minds cycling through your property on an annual basis, so if you’ve got a Nintendo 64 and you don’t upgrade to an Xbox, your property’s dated. So you’ve always got to be thinking of the cutting edge amenities that students want. It’s a very dynamic space that’s always pressing the newest, freshest ideas. College kids, when they come into a student housing project, want to know that the owner of this property gets who I am. [Students think] “[property owners] get students, they get college kids, they get young, they understand it.” So you always have to try to keep pace with that. When I say you’re constantly marketing your brand, you’re constantly trying to keep pace with the newest trends and the desires of the college kids today.
MHN: Do you find yourself marketing to the students or to the parents?
Lynd: You’re always marketing to the parents because unless you have that very rare situation where you have a person who got a scholarship and has a work-study program, then you’re marketing to him because he’s making his own decisions. If you’ve got a parent who’s got the purse strings, you’re marketing to them. And that’s the majority of the students who are in college today. Their parents, a benefactor, etc. are making the decision for where they live and how they live, and there are certain things a parent wants to see. They want to see a well-lit community at night, they want to see some form of limited access gates, they want to see a clean place, they want to see nice amenities where their kids can go relax, they want to see a quiet study area, they want to know it’s got good Internet and cable programs so their kid can get on the Internet and do all the things that they do these days. So you’re constantly marketing to the parents. On most sites we’re asking for parental guarantees anyway; that’s part of the business model.
MHN: You offer individual rent programs for students. Is this standard or something you found useful along the way?
Lynd: It’s something that we found along the way, and it’s tailored to various financial aid packages or how kids pay their rent, whether their parents are chipping in a percentage or the kids chip in a percentage. We just try to work with either the financial aid package and how they’re paid from their jobs, to make sure it’s not just “rent on the first,” and [then] the kid is struggling to make that payment. We’ll tailor that around each person’s specific situation.
MHN: What if one roommate defaults on the rent?
Lynd: Typically most of our deals are “by the bed,” and each student has their own room, so if somebody doesn’t pay their portion of the rent, they’re evicted and the rest of them are just fine.
MHN: Do you plan on expanding anywhere else?
Lynd: We’re in full expansion mode; we’re looking at several portfolios right now. I’ve got about four student housing deals right now that I should be awarded with in the next couple of days. It’s a very good buyer’s market.