The end of the summer and the beginning of the school year is not a time most of us tend to anticipate, unless you’re a property owner near a university. Rental properties near universities can be gainful cash cows that provide great financial reward, but that doesn’t mean they are risk-free. Here are the pros and cons of renting to college students.
Pros:
1. Consistent Demand
Sixty percent of full-time college students at public universities and 26% in private universities live off campus (For a list of the top 100 US colleges and universities with the highest percentages of off-campus residence click here). Most of these students either live with their parents or in rental properties.
Students find rentals near universities attractive, especially if the property is very close to the university. There is always a constant demand in college towns (or simply properties near universities) as a semester draws near.
Although we just mentioned that properties near universities are extremely desirable for students, there is more that comes into play. A property near the university and near restaurants, bars, a public transportation route, supermarkets, and other common facilities is much more enticing than a property simply close to the university.
2. Assured Pay
Renting to college students almost always has guaranteed pay. Parents tend to cover the rent, and sometimes even pay in advance, as it’s easier to pay for a full semester at once rather than to pay month by month. Student loans are also used to pay rent. Either way, you will be getting your money on time.
3. Higher Rent
You could be able to charge a higher rent from students than non-student tenants, because as we previously mentioned, there is a higher demand on rentals closer to the university. Also, rent to college students is normally based off bedrooms, and it is not too difficult to add more bedrooms. All things considered, the rent would be higher within a reasonable range depending on the property and the market.
Related: How to Set the Right Price for Your Investment Property
4. Lower Expectations
Another pro of renting to college students is that they are less picky (in most aspects) when it comes to choosing a property. They will mostly be concerned with the rental’s proximity to the university and to facilities. They will not, however, care as much about decorations and some common amenities such as a certain kind of bed, refrigerator, window frame, and so on. Student tenants will be content with average, yet decent, properties.
Despite these alluring and convenient benefits of renting to college students, there are some disadvantages to consider.
Cons:
1. College Student Antics
It’s no secret that college students can be irresponsible and immature. Anything from complaints of loud noise to property damage from a reckless party could be possible when renting to such college students.
To add to these issues, college students can be messy tenants. Also, since most college students will be away from their home for the first time, they may need assistance regarding the rental more routinely compared with non-student tenants.
2. Market Oversaturation
Although this real estate strategy is very profitable, it is becoming pretty common throughout the country. In some college towns there is an oversupply of student rentals. If you plan on renting to college students, search for a market that is not flooded with student rentals, it would be best to find a nascent market so that you can reap greatly with little competition or oversaturation.
3. Annual Turnover
Leasing will normally take place before a semester begins, but once the school year is over, it is possible that the property becomes vacant over the summer. Students usually sign short leases, normally around 6 months. It is also likely that the same student tenants do not return to your property and instead rent out elsewhere. Annual turnover is expected when renting to college students.
You now know the main potential risks to expect when renting to college students. We won’t leave you in the dark; here are some tips to counter these cons and form a successful student rental.
- Leasing: As we mentioned, some student tenants can irresponsible. In the lease, mention specific rules regarding noise, maximum occupancy, and damages. Include bans on things you feel may damage the property, such as certain kinds of pets, fireworks, and weapons of any kind.
Also, let the student’s parents be cosigners on the agreement, this is mandatory if the student is still a minor. But even if the student is not a minor, consider having parents cosign the lease.
- Tenant Screening: To further guarantee a safe and well-behaved tenant, find out more about the student. For example, does the student have a criminal track record? Has the student been banned from living on campus for any reason? If the answer to either of these questions is yes, then you have a red flag. You may also want to screen the credit of the student or parents depending on who will be paying the rent.
Related: 8 Things that make a Good Tenant
- Property Manager: Consider hiring a property manager. This way you will have someone who supervises the property, finds tenants, handles complaints and maintenance, markets the property, and collects the rent. Sure, this obviously comes with a fee, but it also takes a lot of weight off your shoulders.
Related: Consider Property Management Options for Your Rental Property
- Must-have Features: Some amenities are pretty much when renting to college students. The main one is a laundry facility. The lack of washers and dryers will be a huge turn off for your property.
Privacy is also a main concern of students, especially since many rent out the same property. Try to have multiple bathrooms, preferably one for each bedroom.
Student tenants will not be too concerned with very fancy furniture. Include easy-to-clean furniture and decorations.
- Advertise the property on the university site, this is where students will first go to in search of a rental.
All in all, renting to college students can be very profitable. Try to avoid the risks mentioned and follow the tips given to ensure a successful student rental. Be sure to use Mashvisor to find the right rental for you.