What Landlords Need To Know About Renting To College Students

Real estate investments can be a great way to diversify your portfolio, but they aren’t a one-size-fits-all approach. You can invest in luxury homes, average suburban homes, urban condos, and flats, or homes in a college town.

If you buy a home in a college town, chances are you’ll have college students as your tenants. While it’s not a bad thing, there are some different considerations when you rent to college students versus renting to a traditional adult.

Here’s what you should know.

What College Students Want In A Rental Property

Renting to college students provides an entirely different landscape than if you rented to a family. College students prioritize saving money over finding a home with all the best amenities. Of course, there are certain features they want in a home, but if they can find a ‘sweet deal,’ they will usually take it over the house with ‘everything’ yet costs more.

While you’ll want a home that has the basic comforts of home, most college students want the following:

• A home close to campus so they can walk to their classes and activities
• A home close to public transportation, whether trains or buses, as most college students don’t bring cars to school with them
• A washer and dryer in the home
• Wifi and cable for school work and entertainment
• Utilities included in the rent, so they don’t have to worry about more bills
• Solid safety features, including good lighting, solid locks on the doors, sturdy windows, and a well-lit area 

Of course, college students want all of this at the best price possible. Most college students are on a budget. Even if mom and dad are footing the bill, they want to keep it as low cost as possible. 

Pros & Cons Of Renting To College Students

Pros

• Few vacancies - Renting a property in a college town means you’ll have a much easier time finding renters. Most college students sign either a full-year lease (year-round) or an August-May lease. Either way, the demand for housing surges every year before school starts, making it easy to rent out the property.
• College students aren’t demanding - Renters can be demanding, wanting only the best in their home and holding you responsible since you’re the landlord. But when you have college students as your renters, they are typically more easygoing. While you must take care of the property, you probably won’t be harassed with tons of phone calls asking for repairs or reporting issues all the time.
• Financial aid may foot the bill - If you’re lucky enough to get a renter who is receiving financial aid or a grant for living on campus, you are sure to get paid rather than taking the risk on a college student who may or may not pay the rent on time.
• Save money on marketing materials - When you rent in a college town, you don’t have to do much advertising. Once the word gets out that you have a rental property, it spreads fast. Often, it’s friends of the current tenants that end up renting the property the following year.
• Appreciation - Most homes near universities appreciate at a decent rate because of their location. Since colleges are such an asset to the community, they help properties in the area appreciate at rates faster than homes in non-college towns.

Cons

• Hard to vet the renters - When your renters are college students with little to no history behind them, it’s hard to credit check them or vet any of their details. If they don’t have parents or an organization footing the bill, you’re taking a risk on renting to them.
• Inexperienced renters - For most college students, this is their first rental. They may not know how to take care of the property, which could lead to problems when they leave. Whether there’s pest infestation, damage in the home, or the house becomes rundown because of the lack of maintenance. It could deplete your profits.
• High turnover rate - Most college students don’t stay in the same home for more than a year. With a high turnover rate, you’re always dealing with new renters and new potential problems. A high turnover rate also puts more wear and tear on the home.
• Vacancies during breaks - Vacancies during winter break or summer break leave the home open to vandalism or theft. It could even mean preventable damage, like frozen pipes or water damage from a leak that would have been prevented if caught sooner.

9 Tips For Renting To College Students

Renting to college students has its benefits, but check out these tips before you take the plunge.

Require an Adult Co-Signer 

We talked about how hard it is to vet college-aged students, but you can vet them if you require their parents to be on the lease. Knowing the parents’ history with bill payment, looking at the credit scores, and researching their eviction and criminal record will give you insight on what you may deal with renting to their children.

Having adults co-sign the lease also makes someone else responsible for the rent if the college students default on it.

Collect a Decent Sized Security Deposit

Always collect a security deposit and a sizable one if you can. While you have to mind the Fair Housing and Landlord-Tenant laws in your area, you should be able to collect a larger security deposit than you would from other renters.

The security deposit should be in line with the level of risk you take renting to the college students. At the very least, collect one month’s rent upfront, but research the laws in the area to see if you can collect more.

Make the House Durable

Anytime you rent a house to others, you want to make sure it’s durable, but even more so with college students. Remember, you’re renting to people who have little to no experience living in a house themselves. They may not realize how to take it easy on the house.

Think about painting with durable paints (not flat paint), installing ‘cheaper’ flooring that can withstand heavy use, and installing ‘basic’ faucets and lighting fixtures. Don’t go overboard with anything fancy or ‘top of the line’ because it will likely get ruined and cost you more money.

You Can Charge Rent by Bedroom

If you rent to multiple people, you can charge rent per room rather than one flat rate. For example, if you’d charge a family $1,500 a month for rent, but you’re renting to 4 roommates, you can charge each renter $500 a month and make $2,000 a month instead of $1,500.

Conduct Inspections

Include in your lease a provision to conduct inspections periodically. This does two things - it keeps the renters accountable, knowing that you might pop in at any moment to check on the place, and it helps you know what needs fixing before it gets out of hand.

If problems are left unfixed all year (college students are known to ignore problems), it can cause even more issues. For example, if the faucet has a small leak and you catch it early, there may not be any other damage. If it goes unnoticed (or no one tells you), the water leak can lead to serious water damage underneath the sink, on the flooring, and even on the ceiling below if it’s on an upper level.

Figure Out a Screening Process

Don’t just let any college students rent your property. Even if they don’t have a credit history, you can check other areas of their life to know what type of person they are to help you make a decision. At the very least, conduct a criminal background check. But if the renters rented before or they held a job, you can do an income check or even vet their parents. 

Have House Rules

While you might not lay down house rules if experienced adults were renting the property, it’s crucial when you’re renting to a group of older teens. Let them know what they can and can’t do in the house and the consequences of breaking those rules. Have it all in writing, so everyone is on the same page.

Use Your Current Renters to Advertise for You

Because college students usually move out of a house at the end of each college year, you’ll need to fill the vacancy often. Ask your current roommates to spread the word about the home becoming available, and you’ll likely fill the vacancies much faster.

Consider Automating the Rent Collection

College students are stressed out with schoolwork, exams, and getting their degrees. Rent payments may not be at the top of their mind. If you’re concerned about getting paid, consider setting up an automated rent collection or using a property management company to watch over the property and collect the rent for you. 

Finding The Right Home To Rent To College Students

If you’re ready to rent to college students, you need to find the perfect home. Knowing the statistics for the area, how well-liked the area is, the average rent costs and the average profits are essential. Using a platform like Roofstock Marketplace can help you get the information you need.

If you don’t live in a college town yourself but see the profitability of being a landlord in a college town, you’ll need a company that can provide you with information you need to rent across the state or even out of state.

Roofstock vets the properties for you provides you with the information you need and matches you up with a property management company. If you don’t want to deal with managing the property yourself, a property management company can do it for you.

The Bottom Line

Renting a home to college students can be a great investment. If you’ve never invested in real estate or you’re looking to add to your portfolio, it’s a great way to diversify. You’ll find exciting and new places to invest in real estate, and if you use a platform like Roofstock Marketplace, you’ll have all the help and resources you need to make good choices.

Just like when you rent in any other area, make sure the home is in a good area that renters want to live, the rent is high enough to cover the cost of your mortgage, home maintenance, and other costs, and you’ll still walk away with a profit.

It’s a lot to take in and figure out, but when you take advantage of the many resources offered by Roofstock, investing in real estate seems easy. You may even find that you diversify and invest in several college towns, capitalizing on the popularity of the rentals in these towns.

Image by Tumisu from Pixabay