{"id":3716,"date":"2019-08-07T04:08:45","date_gmt":"2019-08-07T11:08:45","guid":{"rendered":"https:\/\/www.rentecdirect.com\/blog\/?p=3716"},"modified":"2022-06-14T09:02:15","modified_gmt":"2022-06-14T16:02:15","slug":"the-pros-and-cons-of-renting-to-college-students","status":"publish","type":"post","link":"https:\/\/www.rentecdirect.com\/blog\/the-pros-and-cons-of-renting-to-college-students\/","title":{"rendered":"The Pros and Cons of Renting to College Students"},"content":{"rendered":"

\"Renting<\/p>\n

College towns have become hot markets for real estate investors looking to capitalize on off-campus housing demands from a steady stream of renters year after year. <\/span><\/p>\n

College towns have higher rates of renter-occupied housing, giving landlords a reliable stream of tenants. \u00a0An article on Forbes<\/em> gives this example<\/a>, “in a state like Indiana, where the percent of renters in many counties is less than 25 percent, renters in counties with a university can be 32 percent (Notre Dame), 38 percent (Purdue), or 48 percent (Indiana) of the population.” This makes buying a college town rental properties an attractive option for investors.<\/p>\n

While some landlords or management firms may be leery of accepting students as tenants due to lack of rental or credit history, with precautionary measures in place student housing can be become a profitable revenue stream.<\/p>\n

Benefits of Student Housing<\/h2>\n

Reliable Tenant Pool<\/strong><\/em> – With some student populations ranging from <\/span>20,000-50,000 and accounting for as much as 25 percent of a town\u2019s total population<\/span><\/a>, there is high demand for rentals for co-eds who want to live off-campus and are not in the market for purchasing their own home. Each year brings a steady flow of new potential tenants as freshmen move out of the dorms into their own off-campus rental.<\/span><\/p>\n

Steady Rental Income<\/em><\/strong> – As the Great Recession demonstrated, the rental market remained strong and\u00a0<\/span>college enrollment increased<\/span><\/a>\u00a0despite economic setbacks and falling home values. \u00a0Increased enrollment in college towns causes rental prices to climb to meet market demands. And with most college students getting assistance for rent from their parents or financial aid, investors are able to reliably collect rental income from additional sources other than a\u00a0tenant\u2019s employment. \u00a0<\/span><\/p>\n

Fewer Vacancies<\/em><\/strong> – Increased demand raises occupancy rates in college rental properties. \u00a0Landlords and property managers can take advantage of high demand by starting the leasing process early to help student\u2019s secure rental housing for the following year. \u00a0Some college towns, like Davis, CA home to University of California at Davis, begin leasing season as early as February for lease terms that start in the fall, which resulted in a <\/span>.4 percent vacancy rate in 2018 for rental apartments in Davis<\/span><\/a>. \u00a0<\/span><\/p>\n

Marketing Made Easy<\/em><\/strong> – With demand so high, managers and landlords typically spend less time marketing properties and are able to spend the extra time on more important tasks. \u00a0Proximity to the university, access to public transportation and walkability to local attractions are usually enough to draw applicants. \u00a0Landlords and property managers in college towns should have a good web presence, as most students will do their apartment hunting online<\/a>. \u00a0<\/span><\/p>\n

Easy Renewals<\/em><\/strong> – College students will typically need rental housing for 2-4 years. \u00a0Landlords can capitalize on this knowledge by sending out lease renewal information<\/a> early to current tenants who are still a couple of years away from graduation. \u00a0<\/span><\/p>\n

Risks of Student Housings<\/h3>\n

No Employment, No Rental History, No Credit<\/em><\/strong> – \u00a0Your typical tenant screening criteria<\/a> might need to get reevaluated when you consider renting to college students. \u00a0Even if a student works part-time, his income may be well below your minimum requirements. \u00a0First-time renters will not have landlord references to check and you could be dealing with a young student who hasn\u2019t had the opportunity to build their credit. \u00a0Without verifiable income, references or credit history is can be hard to determine if your student applicant will be a responsible tenant. \u00a0 \u00a0<\/span><\/p>\n

Increased Wear & Tear<\/em><\/strong> – Student rentals are notorious for accelerating wear and tear<\/a> that goes beyond typical\u00a0turnover cleaning and damage control. \u00a0College students living on their own for the first time might not understand the value (or their legal responsibility) for maintaining and taking care of their home. \u00a0<\/span><\/p>\n

Roommate Mediation<\/em><\/strong> – A college student\u2019s inexperience or immaturity may create roommate conflicts<\/a> that develop into a hostile living situation. \u00a0Your tenants might turn to you for help solving their problem or think they can simply move out before their lease ends without realizing their legal commitment to their lease term. \u00a0 \u00a0\u00a0<\/span><\/p>\n

Naive Maintenance Responsibilities<\/em><\/strong> – For some student renters, this could be the first time living on their own without parents or dorm staff taking care of the maintenance. \u00a0Simple things like regular cleaning, using appliances appropriately, changing a light bulb, or reporting maintenance issues could be a whole new experience for them. \u00a0Make sure your tenants know what maintenance they are responsible<\/a> for and who to contact the second an issue pops up. \u00a0\u00a0<\/span><\/p>\n

College Parties<\/em><\/strong> – <\/span>After a lifetime with the parents, or a year or two in the dorms, students that are moving out on their own for the first time may try to push the boundaries with parties or social gatherings that threaten to damage the property or disrupt your other residents. <\/span>\u00a0<\/span><\/p>\n

How to Mitigate Risks when Renting to College Students<\/h3>\n

Require a co-signer or guarantor<\/a><\/em><\/strong> – Just because your student renter is a first-time renter or doesn\u2019t have a qualifying credit score, doesn\u2019t mean they will be a bad tenant. \u00a0For added protection though, if your student applicants did not meet your screening criteria<\/a>, \u00a0ask for a co-signer or guarantor who will be financially and legally obligated to pay rent and cover the cost of tenant caused property damage. \u00a0Student co-signers are typically parents or family members with verifiable income and great credit. \u00a0\u00a0\u00a0<\/span><\/p>\n

Screen every tenant<\/a> and co-signer<\/em><\/strong> – Every person that signs your rental lease needs to provide verifiable income and references, as well as consenting to a credit and background check. \u00a0A co-signer will be useless protection unless you can prove that they are financially responsible and have the means to cover rent if your tenant cannot. \u00a0Landlords should also consider checking university records as part of their screening process to verify that student applicants have not received disciplinary action that might not show up on a criminal background report. \u00a0If an applicant was kicked out of on-campus housing or is on academic probation, that could be a red flag for disregard to rules and responsibilities. \u00a0\u00a0<\/span><\/p>\n

Collect the maximum security deposit<\/em><\/strong>– Your state and local rental housing laws dictate how much you are legally allowed to charge tenants for a security deposit. \u00a0By asking for the maximum amount you provide extra protection if your student tenant causes property damage beyond normal wear & tear or stops paying rent. \u00a0Remember if you increase your security deposit amount make sure you do it for everyone, not just students or young renters, to avoid Fair Housing violations. \u00a0<\/span><\/p>\n