Renting to college students : good, bad, ugly?

[Esther Tama]

I'm an OOS investor currently looking into a duplex near a state university in Indiana. Tell me stories of the good, bad, ugly of marketing to/attracting college students? What should I be prepared for? How does it impact finances during "summer" months (if at all)?

[Bjorn Ahlblad]

Investors make and lose money every day, in every category of REI you care to mention; notes, students, STR, LTR, whatever; just be sure you master the numbers, and align that with your goals.

[Nick Rutkowski]

@Esther Tama

I have students renting one of my airbnbs. They are kind, honest and try to fix problems before calling me. By far my favorite guests/tenants I’ve had. I let them rent my place again next semester. The little secret no one tells you is FASFA will pay for off campus rent. Guaranteed money. The other secret is to treat them like adults not kids. If you don’t look down upon them and treat them fairly it will reciprocate back to you.

Will they get drunk, break things, and not tell you? Sure but so will an adult tenant.

[Esther Tama]

Great advice and thoughts. Thanks for sharing! 

[Brett G.]

@Esther Tama

One of the biggest pros, at least for me, is student rentals can rent for more than your typical family rental. And, where I am at, the leases are for one year. We typically get the next lease done 3-4 months before the current lease is up, so we should roll right in to the next lease with no vacancy period. This can vary depending on where you invest and the typical nature of different colleges.

Potential cons are some students may party a lot, leave their beer cans and trash strewn about, break a window, put a hole in a wall, have guests over that don’t care about your property, etc. I have not had to deal with much of the cons, yet. You just have to understand who you are dealing with and roll with it.

We lease to groups of kids where everyone is individually and wholly responsible for the entire amount of the rent. So, if one person leaves early, the full rent is still due. We do not rent by the room as we would likely have more vacancies we would have to try to fill.

Some things to consider with college student rentals:

Zoning: Make sure the property is zoned for the number of unrelated people living together.

Location: Proximity to campus, bars, other amenities that interest college students.

Opportunity: Find a 3 or 4 bedroom that you can make in to a 4 or 5 bedroom. This can be the quickest way to increase rents the most.

Property Management: A good property manager will make your out of state student rental investing much, much easier.

[Esther Tama]

Thanks! I’ll have to look into zoning - didn’t even think of it. Currently it’s a duplex with 1 bedroom each. Good suggestion on looking at doubling up, and making full rent due. Appreciate the advice! 

[Ian K.]

I do 12 month leases.  I've found they don't care too much if they are not there in the summer especially if it is a competitive market.  Usually one or two will stay at the house over the summer but all of them pay.  This might not be the case everywhere as I'm sure it is a local way of doing things.   In Denver, college students are competing with everyone else so they have to take what they can get.  

[Joseph Crawford]

@Esther Tama I had to co-sign my sons off campus lease as well as the rest of his roomates parents.

Highly recommend.

[Gaetano Ciambriello]

Student rentals provide more income. There are problems, but there are problems with every RE niche. I am a fan.

[Matt Ternullo]

I don't have experience with investing in student housing but recently graduated from a large state school and all the houses were 12 month leases, that was the expectation so no one questioned it. People either let them sit empty all summer, lived in them for work at the school or sublet to other kids who were taking classes in the summer.

[Andree Axinn]

I have several SFH rented to kids attending OU. They sign a 12 mos lease. Each student along with their parent is on the lease and all are legally responsible for rent and damages. Getting paid is easy cause the parents pay the bill. I have never had to evict a student for non payment.
The downfall is all the damage. The kids don’t maintain the yard, are hard on walls and appliances, don’t change air filters, take down the smoke alarms instead of changing a battery and they always sneak in pets that are not on the lease. There is also usually issues with extra people living there that are not on the lease. None if this is a problem if you do regular inspections. 
Bottom line, in a University town, rental property is golden. Money is good and your home will stay rented … but you will need to check up on your tenants about 4x per year, change filters yourself, remind them every single time the temps drop to take freeze precautions (and I still drive by to see its done), etc. 

[Kim N.]

@Brett G. - Thank you for your input, how do you advertise for student rentals? Facebook groups seems to have a lot of subleases. 

[Dave Poeppelmeier]

Quote from @Esther Tama:

Thanks! I’ll have to look into zoning - didn’t even think of it. Currently it’s a duplex with 1 bedroom each. Good suggestion on looking at doubling up, and making full rent due. Appreciate the advice! 

If you have a 1/1 Duplex, you might not get the typical "Student Rental" bump in rent. Typically, when students rent off campus houses, they want to live with their friends. Not every off campus house is Party Central (some schools are, however), but the attraction is getting out from under your Parents and RA's thumb and live how you want to. But, with a 1/1 unit, you're going to most likely get a couple or some Grad students, which isn't a horrible thing. Be sure to check and see what other 1/1 duplexes are getting in rent, and see if you can talk to some students on Facebook groups or something and see what the demand for that type of unit is. 

[Brett G.]

@Kim N.

My property manager is one of the "go-to" people in the town for rentals. She does also advertise on the local Facebook rental groups.

The bulk of our Facebook group advertising happens within the 2-3 month period when we are trying to fill for the next school year. Generally, during the rest of the year, what I see on the Facebook group pages are students looking to leave and sublease their spot in a house.

[Kim N.]

Quote from @Brett G.:

@Kim N.

My property manager is one of the "go-to" people in the town for rentals. She does also advertise on the local Facebook rental groups.

The bulk of our Facebook group advertising happens within the 2-3 month period when we are trying to fill for the next school year. Generally, during the rest of the year, what I see on the Facebook group pages are students looking to leave and sublease their spot in a house.

 For college rentals when do you typically start ad for next school year? 

[Brett G.]

@Kim N.

In our particular situation, most students start early looking for places to live the next school year. We start advertising and signing leases in January for a May-April lease.

This will vary from school to school and town to town. I recommend talking to property managers, other landlords, and even the college to get a feel for the student rental cycle in your area. Property managers that deal with student rentals is probably your best place to start.