If your properties are located near a university, you’ve probably rented to (or considered renting to) students.
But what does student renting really entail? What are the risks, consequences, and benefits?
Leasing to college students is a favorable decision for many landlords. Student rentals are always in high demand and have many benefits for landlords.
However, like any renter population, student renters come with some risks. If you aren’t prepared for the types of trouble you may encounter, your experience renting to students could be less than great.
Here’s what you need to know before leasing to college students.
Demand and competition are high.
If you decide to try student renting, you should expect demand and competition for your rentals to be high.
While this is great news, it also means you need to be picky about which applicants you accept. You’ll have your pick from a variety of applicants, so be sure the ones you choose are qualified and likely to be responsible renters.
Keep in mind that most student renters are looking for affordable, basic apartments. You won’t need to waste money on expensive renovations or extra features like fireplaces. Instead, focus on ensuring basic quality units that check the most relevant boxes (affordable, clean, safe) and providing excellent maintenance. Features like internet or in-unit laundry are also attractive to students.
Because demand for student rentals is high, you also won’t have to spend as much on marketing or advertising. Your proximity to the university will usually attract plenty of applicants each semester.
Student renters are often inexperienced.
It’s no secret that student renters are usually underexperienced when it comes to renting.
For many students, this will be their first apartment. This means it’s more important than ever that you clearly state your rules and expectations in the lease agreement.
A welcome package with a list of community rules isn’t a bad idea, either. Regular inspections are also a great time to remind your student renters of the rules they must follow.
You should require a co-signer or guarantor.
Despite your best efforts, not all student renters will be reliable.
That’s why it’s important to protect yourself legally should a student default on their rent payments or otherwise break the lease.
Requiring a co-signer or guarantor is one way to get this protection. A co-signer, often a parent, is a person legally responsible for paying rent if the student defaults.
Another reason to require a co-signer for student renters is that few students will be able to meet your income criteria on their own. Unless they work full-time or have another significant source of income, students will not make three times your rent rate each month. But their parent or guardian likely does. By requiring a co-signer, you can evaluate the applicant’s eligibility based on their co-signer’s income in addition to the student’s.
It’s often best to rent by-the-bedroom.
Another tip for student leasing is to rent by-the-bedroom.
In a traditional lease structure, roommates who live together in a unit are jointly responsible for the monthly rent. Renting by-the-bedroom, by contrast, divides the rent into equal parts such that each tenant is only responsible for their portion of it.
This lease structure works better for college leasing because students often study abroad, transfer universities, or take semesters off. If one roommate leaves or defaults, the others will not be responsible for that person’s rent.
Renting by-the-bedroom also helps you fill units and generate more revenue, as you can lease each bedroom separately. You can set up this structure on your property management software platform by assigning each student a portion of the rent.
Not all students fit the stereotypes.
Lastly, remember that not all students looking for housing near a university are traditional college students.
A large percentage of college attendees are nontraditional students—older adults, parents with children, graduate students working full-time jobs, etc. These students often have much more prior renting experience and don’t need the help of a co-signer to secure housing.
Even some traditional college-aged students may meet your requirements on their own, and will be quiet, responsible renters.
While it’s important to know the risks and understand the likelihood that inexperience will come into play, it’s best to assess each applicant independently from any preconceived notions you might have.
Conclusion
Renting to college students is a lucrative decision for most landlords. The risks that do exist with student renters are easily mitigated. So long as you take proper precautions, you can count on high demand to keep you in business all year long.