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While landlords may have some doubts when it comes to renting to college students, it can be a lucrative opportunity with low vacancies, high demand, and the chance to earn increased revenue. There are strategies you can use to minimize the risks as well. Let’s take a look at some pros and cons.
1. Pros of Renting to College Students
Before we get into the risks and how to minimize them, it’s important to understand the advantages of renting to college students.
High Demand for your rentals
So long as the school remains open, your units will always have a market. The majority of colleges don’t offer housing for four years, so each year, you will have many students looking for a place to live.
Higher Rent
College rentals typically rent for more per month than similar properties. For example, it is not uncommon to see a 3 bedroom college rental rent for $1,500 per month while a similar 3 bedroom non-college rental property may rent for $1,000 per month.
Lower Marketing Costs
Real estate is all about location, location, location. When it comes to housing in a college town, this alone helps your rentals get filled faster. You can expect to pay for little or no marketing.
Stable Third Party Payments
Many college students aren't employed, so their rent is generally paid by parents or financial aid. This means you are more likely to get the full rent, on time each month.
2. Cons and How to Minimize the Risks
As you can see, there is an upside to renting to college students. However, like anything else - there are also downsides.
No Credit, Rental, or Employment History
It’s hard to conduct a background check on most college students because they don’t have a great deal of experience with bills or employment. The best thing you can do is call for character references and require a cosigner who has established credit.
Noise Complaints
While the majority of students don’t throw huge parties every weekend, it can get noisy with a bunch of friends living together. Consider adding clauses to your lease and educate tenants to abide by local noise ordinances.
No Experience with Maintaining a Home
Many students will be first-time renters. In other words, they won’t know much about basic property upkeep. Poor maintenance can lead to pest problems and small repairs turning into larger repairs when they’re not reported in time. Conducting periodic inspections of their apartments will ensure smaller issues don't become larger ones. You should also add a clause to the lease that explains regular maintenance and how to report problems.
No Concern for Utilities
Many students will blast the A/C and heat, leave lights on, and keep water running for long periods of time. This can result in high utility bills. The best way to protect yourself as the landlord is to require that tenants pay all utility bills. If this isn’t possible for your unit, try to calculate what you think the bills will run, and then add that into the monthly rent. You should also advise your tenants to never turn the heat off when they go away in the winter.
Conclusion
In the end, it can be a great idea to rent to college students. Not only will it help keep your unit occupied, but it presents the opportunity for you to earn more rental income.
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