Low interest rates are another sign that now is the time to invest. Despite the Fed's recent increase of the target for the federal funds rate, interest rates still remain at historical lows. And while interest rates are expected to rise; the increase is projected to be gradual. Investment decisions should not be delayed too long because rates are not expected to be any lower in the near to intermediate term.

How to break into this investment trend

Breaking into the student housing investment market can be difficult without the right partner. It's important for investors to find trusted professionals that have experience in student housing.

Investors should ask their potential partner if they have developed or purchased student housing in markets with similar profiles. For example, find out if they have experience with schools and cities of similar size, markets with a similar competitive landscape, and projects with similar types of construction. Make sure your partner is knowledgeable about other student housing projects that have been approved for development, whether the school is planning to add on-campus housing and any potential changes to the school's on-campus living requirement. Ask how they view future development potential and barriers to entry. The key is making sure they know the business and the market. The right partner should be able to readily answer these types of questions. Investors shouldn't pay for their partner's on-the-job training.

The ideal partner will understand student housing market dynamics and is adept at finding hidden gems. While some large flagship universities provide instant name recognition, some secondary and tertiary markets have schools with strong enrollment, relatively little purpose-built student housing and perhaps better development opportunities.

Investors should be wary of markets that are overbuilt. These markets tend to have high vacancy and a recent influx of new developments. There are some mature student markets that still have great development opportunities as long as the location is right, the product fits the market and the supply/demand outlook is favorable. Better locations tend to be in walking distance to the campus or have immediate access to mass transit to campus. Some locations that are in close proximity to other destinations, such as entertainment and retail districts can be desirable as well. To know if the product fits the market, it usually has to offer comparable or superior amenities to what is available in the market, although it doesn't always have to follow what is already there. Sometimes product differentiation is a key driver to a project's success.

In any event, it's important to understand the student community and be able to assess what market needs are being met and which ones are not.