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College towns can be a fertile field of opportunity for property investors who are looking to rent to students. The absolute need for accommodation near the university and steady turnover makes it easy to gain a favorable position when it comes to charging (and raising) rents. Some parents think ahead by purchasing a home for their child and then continuing to use as a rental once she or he finishes school. Interested investors should look for cities with high student populations and a higher average cost of rent. Realtor.com rated the best college towns in which to invest in rental property and the top five include Pittsburgh, Chicago, Boston, Atlanta and Princeton, New Jersey. For more on this continue reading the following article from TheStreet.

Rental properties in college towns can offer great returns to real estate investors and parents of university students alike, a Realtor.com study finds.

"College towns have a natural cycle of tenant flow," Realtor.com's Jennifer DuBois says. "You know [a student] is going to be in town for four years -- and when they move out, the next bevy of students will be moving in."

DuBois says parents who face big tuition bills might find buying a rental that their child can live in while at school will take some sting out of high college costs.

"Owning a condo that your child can live in while at school can make a college education more affordable, depending on how long you hold it and how much home prices appreciate," she says. "It certainly won't pay for an entire college education, but it's a good way to at least get some money back."

To help investors and parents find the best returns on college-area real estate, Realtor.com recently analyzed market conditions in cities hosting the top 25 national universities in U.S. News & World Report's annual school rankings.

The five cities below offer the highest rents relative to what you'd pay each month on a mortgage for a typical property in each locale.

All rental prices refer to average asking rents on Rentbits.com as of July, while monthly mortgage bills reflect what you'd pay for median-priced home advertised on Realtor.com for each city during the same period. (The study assumes you'd take out a 30-year-fixed mortgage with 20% down and today's average interest rate of about 3.6% interest rate.) 

Fifth-best city: Atlanta ?
Difference between rent and mortgage: 182.6%

DuBois says "Hotlanta" offers investors the potential of good rental income and solid capital appreciation.

That's because the 5.3 million-population metro area's real estate market -- which tumbled during the housing bust -- appears to be rebounding. Median Atlanta-area list prices on Realtor.com rose 9.8% over the past year to hit $174,900.

"Atlanta was hit hard by foreclosures, but prices are starting to appreciate there and I think we're seeing some stability," DuBois says.

Georgia's capital city also offers investors high rents relative to monthly mortgage payments.

Rents there average $1,187 a month, or 182.6% more than the $650 monthly mortgage bill you'll face on a typical property.

Atlanta also offers a large base of student and nonstudent tenants.

The city not only hosts giant Georgia State University (32,000 students), Emory University (13,900 pupils) and other schools, but is home to such top corporations as Coca-Cola (KO) and Delta Air Lines (DAL). "There are multiple tenants you can appeal to -- not just students," DuBois says. 

Fourth-best city: Princeton, N.J. ?
Difference between rent and mortgage: 209.8%

Rents in the home of 7,900-student Princeton University average $2,056 a month -- more than double the $980 monthly mortgage bill on a typical home in the area.

Besides hosting a world-famous school, Princeton serves as headquarters for Berlitz, the Educational Testing Service and other large local employers. Bristol-Myers Squibb (BMY), Dow Jones and other big firms also have significant operations in the area.

Additionally, the 60,000-population community is just 10 miles from the New Jersey state capital of Trenton, as well as roughly 45 miles from Philadelphia and New York City.

All of this has given Princeton a relatively stable housing market. Median asking prices on Realtor.com rose 0.03% for the Princeton/Trenton metro area in the 12 months ended July 31, to reach $265,000. 

Third-best city: Pittsburgh ?
Difference between rent and mortgage: 215.8%

The Steel City and surrounding communities are home to more than a dozen schools, from the 28,800-student University of Pittsburgh to 12,100-pupil Carnegie-Mellon University.

Buyers will also find the lowest home prices and monthly mortgage bills of any town on Realtor.com's list.

The median Pittsburgh home listed for just $140,000 as of July, with an estimated monthly mortgage payment of $520. That's less than half the average $1,122 asking rent investors can expect from tenants.

On the downside, Pittsburgh has a declining population, which DuBois says can hurt home prices in the long run.

"Pittsburgh definitely has challenges, but it's got good universities, it's made big investments in arts and pro sports teams and the cityscape is interesting," she says. 

Second-best city: Chicago ?
Difference between rent and mortgage: 226.4%

America's "Second City" places second on Realtor.com's list because of high average asking rents ($1,630), low median mortgage bills ($720) and its many universities.

Several large schools call Chicago home, including Northwestern University (20,000 enrollees), the University of Chicago (12,300 students) and the Illinois Institute of Technology (7,800 pupils).

DuBois adds that 9.8 million-population Chicago is also America's third-largest metro area, "so you've got a large pool of potential renters."

That said, Chicago home prices have yet to bottom out.

Median asking prices on Realtor.com fell 3% over the 12 months ended July 31 to hit $194,000.

DuBois attributes some of the decline to the fact the Illinois requires banks to go through a lengthy judicial process to foreclose on homes. As a result, it's taking a long time to clear the state's backlog of distressed properties, she says. 

Best city: Boston ?
Difference between rent and mortgage: 248.7%

Boston is perhaps America's biggest college town, with more than 100 schools and more than 250,000 students.

Best known as the home of Cambridge's Harvard University (19,900 students) and the Massachusetts Institute of Technology (10,900 enrollees), Beantown also hosts Boston University (32,400 pupils), Northeastern University (19,700 attendees) and other large schools.

Add in a fairly strong local economy and you get a hefty $3,084 average asking rent. That's more than enough to cover the $1,240 monthly mortgage bill you'd face on a home with the Boston market's median asking price of $334,900.

"Boston is a large urban center with lots of institutions of higher learning, so investors will find great opportunities in the rental or resale markets," DuBois says.

This article was republished with permission from TheStreet.