Pros and Cons of Renting to Students
Taking Your Rental Property Back to School
Renting to students is one way to make money as a landlord. Before you consider this tenant base, you need to learn the pros and cons of this type of tenant. Here are five benefits of the student renter and seven negatives of placing a student in your rental property.
Profile of a Student Renter
Description: A student is an individual who is enrolled in a college or university. They could be taking undergraduate classes or may be enrolled in a master’s program.
Age: An undergraduate student renter is commonly between the ages of 17 and 24. The age range for those enrolled in master’s programs is much more varied. A person over a hundred years old could be enrolled in a master’s program if they so choose.
Income: Many undergraduate students go to school as their full-time job and may be making supplemental income from part-time work or work study programs.
Marital Status: The majority of undergraduate students are single, unmarried individuals.
10 Things Students Look for in a Rental
1. Proximity to Campus: The number one thing a student renter is looking for when choosing a place to live for the school year is how close the rental is to the college campus.
2. Affordability: Another high priority on a student’s list is how much the rental costs. Money may be tight, and while they need a place to live, they also want money to eat and to go out with their friends. They may prefer a moderately priced rental to a more expensive, renovated apartment. Living with roommates and splitting the monthly rent can also help keep costs down.
3. Proximity to Amenities: Being close to town is another high priority item on a student’s wish list. Quick access to entertainment, shopping and dining are all desirable in a rental.
4. Access to Public Transportation: Many college students do not have cars, so access to public transportation is a must. This can include trains, buses and taxis.
5. Safety: College students, as well as their parents, want to know that they are safe at home. Low crime areas are the most desirable. Well-lit apartment exteriors are a plus. Deadbolts on doors and working locks on windows are necessities.
6. Private Area: Even if a student is living with roommates, he or she wants their own private space. This can be accomplished by having multiple private bedrooms and a common area, such as a living room and kitchen, which the roommates can share.
7. Laundry: College students would prefer to have on-site laundry at the apartment building or home, but it is not a necessity.
8. Neighbors: Students may have a desire to rent an apartment in a certain neighborhood. Some students want to live in an area with homes predominately rented to other college students. Other students want the exact opposite, and want to live in a quiet residential neighborhood, removed from other students.
9. Updates: If a rental unit has updates, such as stainless steel appliances or a newly tiled bathroom, and it is in the student’s budget, he or she will likely choose that rental over a similarly priced rental that is not updated. For most students, updates are a bonus and not a requirement.
10. Cleanliness: Most students would prefer to live in a rental property that is clean and free from rodents and other pests.
10 Well-Known College Towns
There are many towns across the United States that are home to a large number of students. Life in these towns is often centered around the college or university:
- Athens, Georgia: University of Georgia
- Ann Arbor, Michigan: University of Michigan
- Austin, Texas: University of Texas at Austin
- Chapel Hill, North Carolina: University of North Carolina
- Charlottesville, VA: University of Virginia
- Eugene, Oregon: University of Oregon
- Gainesville, FL: University of Florida
- Madison, Wisconsin: University of Wisconsin
- State College, Pennsylvania: Penn State University
- South Bend Indiana: University of Notre Dame
Important Things to Consider When Renting to Students
Quiet Hours Policy: Student renters are notorious for being noisy. You must include a Quiet Hours Policy as part of your lease agreement so that the tenants know there are certain times when they can have their fun and there are other times when they need to be more respectful of others.
Security Deposit Requirements: Student renters are also notorious for causing damage. Before the tenants move into the rental, you must make sure you collect a security deposit in addition to the first month’s rent, so that you can use this deposit to pay for any damage that may occur. The maximum amount of deposit you can collect will depend on your state’s laws.
5 Pros of Renting to Students
There are certain benefits that come with renting to college students. Here are five unique advantages you may encounter by renting to this segment of the population.
1. High Demand: Many universities and colleges do not offer students four years of housing. Therefore, these students need to find off-campus housing to live in during the years when they cannot live on campus.
There are thousands, and in some places, tens of thousands, of students looking for a place to live, so the demand for student rentals is high. In addition, this demand is cyclical. Each new school year, you will have a whole new set of students looking for a place to call home.
2. Higher Rents: When you are renting to students, you may be able to command a higher rent. This is for two reasons.
First, students often live with roommates, rather than alone. Since the students are splitting the rent payment, you may be able to get a few hundred dollars extra from them than you would if you were renting to the general population. For example, you may charge $2000 a month when renting a three bedroom to the general population, but you may be able to collect $2250 when renting to three college students because each student would only be responsible for paying $750 a month.
The second reason you may be able to get more money is that there is constant demand for the housing. Students who attend the college and do not have on campus housing will be looking for a place to live. When demand for anything is high, you are able to charge more money for it.
3. Third Party Payment: It is very common for a student attending college to have their rent paid by someone else. Often, a student’s parents are the ones who are paying the rent and they will serve as co-signers on the lease. Other students will have their living expenses paid as part of their financial aid package.
In either of these situations, it is very likely that you will receive your rent each month. It is not uncommon for parents to even pay a full semester’s rent in advance.
4. Word of Mouth Fills Vacancies: Students may view certain rental properties as very desirable. These can be properties that are close to campus, that are close to amenities, that are known as party houses or for any number of other reasons.
If you have a property that students want, they may be knocking at your door before your current tenants even move out. For rentals like this, you will have to worry very little about vacancies and will not have to spend much time looking for tenants. You still must make sure you thoroughly screen the students so that you choose the tenants who have a greater likelihood of paying their rent on time and causing fewer problems.
5. Satisfied With Less: Most college students are not looking for the most high end finishes. They are looking for a safe, affordable place to live. They may even complain less than other tenants as they are more focused on school and on their social lives than on examining every square inch of their apartment. They may not notice a drafty window or complain that the kitchen only has two feet of counter space.
7 Cons of Renting to Students
While there are many benefits of renting to students, there are also several negatives to be aware of. College students may not be the most mature renters. Damage and noise complaints are common issues.
1. Inexperience Maintaining Property: College students are young. For most, this is the first time they are living on their own. Their inexperience maintaining property could cost you as a property owner.
If the students are dirty, you may begin to have problems with rodents or other pests. If they do not report small maintenance issues, such as a small roof leak, these small issues can turn into big problems if not fixed right away. Their negligence could also cause damage at the property which you will need to repaired.
2. Inexperience With Money Management: Again, for the majority of students, this is the first time they are living on their own. Money may be tight and sticking to a budget can be challenging. A night out with friends may seem like a better way to spend their money than on their monthly rent.
You could be forced to evict a student tenant midyear for nonpayment. It can be more difficult to fill this vacancy as the majority of students have already found their rentals for the year.
3. Frequent Turnover: When renting to students, you may be faced with yearly turnover. Students usually sign short term leases that run the length of the school year. You will have to fix any damage to the apartment and find new tenants frequently.
4. Competition: You could face a situation where there are more rentals available than there are students looking for rentals. The students will therefore be able to be more selective about where they live. In this situation, you may have to lower your rent to entice students to live in your property.
5. No Rental or Employment History: Screening students can be more difficult than screening other tenants because they are so young that they likely have a very limited employment history and rental history. It is common to have a parent co-sign a student’s lease so in the event that the student stops paying their rent, the parent will be responsible for making the rent payment.
6. Breaching the Lease: Students have a tendency to disregard many of the clauses on the lease agreement they have signed. Student renters have a tendency to be noisy. They may use their apartment to throw parties or may play their music loudly on a regular basis.
To cut costs, there may also be more people living in the apartment than those listed on the lease agreement. Frequent visitors can also increase the wear and tear on the property.
7. Summer Vacancies: Since many students go home during the summer months, it can be hard to fill vacancies when school is not in session. One way to counteract this is by having a student sign a lease for a full year, even if they will not be living in the area for the summer.