Last modified on August 29th, 2018
By Stephanie Vernon
For property owners located near a college or university the end of summer means a potential flood of new tenants. This influx can come with different challenges that you may not be used to. Here are some ways to enjoy the benefits and minimize the risks of providing apartments to college students.
- Many young people can’t find jobs and so they are returning to school. This creates a greater need for college housing, both on and off campus.
- Rents in a university town tend to be higher since they can be pegged to room and board fees at the college.
- Since parents normally cover rent payments, it’s usually safe to rent to college students.
- Student renters are less fussy. Their expectations are not as high as non-student tenants, so they may accept not having the most modern appliances or fancy décor.
- They may pay in advance. It’s sometimes easier for a parent to just pay you for a semester upfront than deal with funneling money to a student monthly in the hope they forward it to you.
- You may be able to advertise on the university site. That’s where students looking for apartments go first when they need off-campus housing.
- Many students are on their own for the first time. Lack of control and immaturity can be a bad combination.
- Students have little to no experience living away from mom and dad’s nest where everything was taken care of for them.
- Students are tougher on apartments than normal tenants due to the short-term nature of their stay.
- Certain institutions are known as party schools, increasing the risk that some students may do damage to their apartments.
- Have your attorney craft a special lease tailored to renting to college students. It should include co-signers as well as clauses on noise, maximum occupancy, and damages/repairs.
- Add both parents to the rental agreement as co-signers since minors can’t enter into legally binding contracts. Consider having parents co-sign even if the student isn’t a minor.
- Specify rules that may sound unusual but are probably necessary. They would include staying off the roof as well as banning candle burning, fireworks or fires, and charcoal grills. You should also prohibit BB guns, paintball guns, or weapons of any kind on the property.
- Have the student pay the utilities. They should see the result of having the air conditioning going all day or leaving the heat turned on full blast.
- Conduct regular tenant screening on students and parents. Students can be difficult to screen since they won’t have much of a credit history. That’s why you should screen the parents as well.
- Find out from the schools if your prospective tenant has been evicted from a dorm.
- Hire a third party to monitor the building, similar to a Resident Assistant in a college dorm. Offer free rent for them to keep an eye on things for you.
- Rent by the bed: This way, one bad roommate won’t spoil the whole bunch or cause as many headaches for you if they need to move out.
The abundance of college students can provide a spike to your business in the fall. If you take the appropriate precautions, such as tenant screening and the other best practices mentioned above, it can be a profitable revenue channel for you.
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I have two townhouses that I rent to groups of students. For the last few years, they’ve continued to cycle through their friends, so when one tenant wants to leave, they simply replace that individual with another from their school. It’s a pretty sweet situation.
Also, I’ve found that I can collect 20-30% more rent from a property if I rent it to a group of tenants, rather than to a single family. The group of tenants or students are more comfortable with smaller living spaces and will often share bedrooms, allowing for more people in the house (as long as you don’t go over your occupancy limit). This allows the total rent to be shared among more people. So even if I charge 20-30% more, the students are still paying less individually than other if they rented a different house. It’s a win-win for everyone.
I have a few rental properties and am looking to add another. I’m considering a unit near a college and my biggest concern isn’t listed above. What are the occupancy rates like in the summer? Are there a good number of students who keep renting when school is out? Do you typically have 9 or 10 month leases since that’s how long the school year usually is? I’m just concerned that the 20-30% potential for more rent might be offset by having vacancies in the summer.
Hi Jeff – Thanks for your comment. While every location is different, sometimes flexible leases and separate summer leases can help attract and retain student renters as well as protect property managers from losses. Here’s a good article on student lease terms: http://homeguides.sfgate.com/lease-terms-student-rental-properties-59237.html.