Why Renting to College Students is a Good Idea
Renting to college students can be very profitable to landlords who own property within walking or biking distance of a college or university campus. Maybe you already own property in a college town or maybe you found this article because you are on the fence about investing in one. Whatever the reason may be that you are here reading along, there are some great incentives, some risks to keep in mind and of course some tips on how to minimize those risks when it comes to renting to college students.
Discriminating against renting to college students
Before we begin, let’s go over a few things to consider before deciding whether or not you want to rent to college students. You should always be careful on how you word your online and physical ads. Regardless if you’re dealing with renting to college students or not.
You want to familiarize yourself with the housing discrimination section of the Fair Housing Act. For example, if your ad reads something like “we don’t rent to students!”, you could be the target of a discrimination suit for refusing to rent to a specific age group.
Or in California, it is unlawful to discriminate based on an “arbitrary characteristic”, in this case a student. A landlord shouldn’t reject a prospective tenant solely for the fact that the applicant is enrolled in college.
What do college students look for in a rental?
It’s important to cover not only the basic necessities of students but to also try and understand what their lifestyle needs may be. There are a few items that students prefer when looking around for a rental.
- How far is the campus? – This will be the first thing a student will consider when looking at your listing. If you are within walking or biking distance, or even a short bus ride away, you should mention that in your listing. The majority of students have tight budgets and won’t have a car to get around. They also have tight schedules, so they want to optimize their time by not living too far away.
- Local Amenities. – What’s easily accessible around your rental property? Again, college students favor walking or biking distance to important facilities such as grocery stores, parks, libraries, laundry and gyms. Mention key points of interest in your ads to attract more students.
- Is it expensive? – It’s no secret that the closer your rental property is to a major university or college, the more competitive the market. You want to keep your property within the fair market range to attract students. Students are on tight budgets for mostly everything and their living arrangements are no different.
- Wifi – Bills in general. Do you really want to leave it to a young, busy college student to remember paying the water bill every month? A lot of landlords opt for including important bills in the rent such as electricity, water, gas and wifi. Plus, you won’t have to deal with having your tenants set up different bills for different tenancies. Your college tenant will appreciate the fact that there is wifi setup as soon as they move in. One less thing to worry about.
- Furnished? Unfurnished? – The pros of offering furnished or partially furnished rental property to students is they won’t have to worry about packing much to move in or move out. Plus, furnished rentals in California can hold two times rent as a security deposit which means more protection for you as a landlord.
Now that we understand what college students typically look for when hunting for a rental during the school year, we can discuss some pros and cons to renting to college students.
Benefits of renting to college students
Next, we’ll talk about the benefits of why you should proactively rent to students. As previously mentioned, it can be pretty profitable for landlords. Here’s why.
There is a ton of demand for rental property around school campuses. Apartments and rental homes within biking or walking distance of a school don’t stay on the market for long and tend to have longer tenancies. Even during vacation time, students tend to pay their rent so as to not lose prime location. If your college-attending tenant decides to drop out or has a change of housing plans, there is always a steady flow of new students, professors and other school personnel looking for a prime rental near a school.
The rental market for housing near college schools tends to be higher. A competitive market usually means rentals are priced higher. Now, this doesn’t mean you can charge whatever you want when you rent to college students. Make sure you do your market research and price your rental accordingly based on location and amenities.
No need for expensive upgrades
Most college students are just trying to survive their current semester and looking for an affordable, low-maintenance place to get some sleep. You can spend your time and money focusing on providing the basics of a well-maintained rental and keep your fancy upgraded stainless steel appliances for another rental in the suburbs.
Risks of renting to college students
Little to no credit history
Among the most common issues you’ll run into while renting to college students is the lack of credit or rental history. 92% of college students are under the age of 24. This doesn’t give the average student enough time to build enough credit history to properly screen them. The average FICO score for 18-23 year olds, according to experian in 2020 is 674. And according to rentcafe, the average credit score to rent an apartment in San Francisco is 719. There seems to be a trend of rising FICO scores needed to rent apartments in California.
This will also most likely be the first time most college students will be living on their own which makes judging their rental history difficult as well. To top it off, most students wanting to rent from you won’t have a job or steady source of income.
Higher chance of property damage
The lack of rental history at the average young age of college students may be a risk factor as well. Most won’t have the experience to know how the landlord/tenant relationship works. This could become an issue when it comes time to maintenance requests as they might lack the maturity to quickly report issues that could become bigger problems down the road.
If you don’t already do so, it might be time to offer your college tenants more convenient ways to communicate maintenance issues with you such as via text messages and other types of instant communication methods.
Higher turnover rates
Another risk you can possibly see if you rent to college students is a constant rotation of tenants. Turnovers aren’t fun. They cost you time and money. College students’ housing situation can change in a heart-beat. They could find new arrangements with other students, move on campus, study abroad, graduate or drop out.
Tips to lower your risks when renting to college students
Allowing your young tenants to use cosigners can save you a lot of time and headaches. This is because it’s very typical for parents or other family members to pay for the student’s living arrangements. This can also help motivate your college tenant to make responsible decisions by knowing they can severely affect whoever cosigned the lease.
Allowing your student tenants to sublet can also be a good way to help lower the risks of long vacancy periods. Students make friends or at least meet fellow students who are looking for affordable housing. If this is a route you’d want to explore, make sure all the students living in your rental property are properly screened and added to the lease by either yourself or someone you trust.
Rent individual rooms
Similar to the subletting or roommate situation mentioned above, renting your two or three bedroom apartment or home to individual tenants might be convenient to you and your tenants. Tenants can enjoy lower individual rents while you enjoy constant steady income. It’s less likely that all 3 or 4 tenants’ situations will change at the exact same time. You can keep collecting some rent while you replace a subtenant.
Craft a student specific lease agreement
Whatever type of lease you want to offer your college student tenant (month-to-month, fixed lease or individual/roommate agreement), you want to make sure they’re all tailored to protect you and your rental property near a college campus. Here are some ideas:
- Set specific “quiet” hours. This could help curve loud get togethers, or parties.
- Ensure your tenant understands your late rent fee.
- What’s your pet policy? It’s important to protect your investment. Will your college tenant have enough time to properly take care of a pet and a rental?
- Are you including utilities in the lease? Or is your tenant responsible for them?
- Avoid fire dangers by banning charcoal grills and smoking.
- Does your young tenant understand what a security deposit is? What reasons can they be evicted for?
Inspect your rental property frequently
Don’t wait for your young tenant to bring up issues in your rental. Instead, inspect your property frequently and check common problematic areas such as bathroom shower areas, sinks, toilets and kitchen. You can work it into your lease that periodic inspections are required. You can even go as far as to provide your tenant a copy of areas you will frequently check on. This can help motivate your tenant to contact you as soon as a problem arises.
Renting to college students can be lucrative. It can be stressful. It can be fun. It can be all sorts of things. Whatever you choose to do, make sure you always properly and thoroughly screen all tenants and cosigners.
Video: A Guide to Renting to College Students
Filed under: Renting to Students & Roomates