Pros of renting to Students?

[Jenny Keffer]

We own a 3 bedroom, single family home near a local college. Our real estate agent suggested we apply for a student housing permit and rent to Students. The permit requires an application, $200 per year and an inspection. What are the advantages to Renting to Students vs a family or individual? Is it worth it?

[Account Closed]

The beauty of renting to students, is that they are not affected by the economy.  As long as the college/university is going strong, there will be tenants who need housing.

When I was managing a 26 unit building in Silicon Valley, and the market crashed, almost overnight we lost around 6 or 7 tenants.  They had lost their jobs.  Rents plummeted.  The building was across from a university, but the owner did not like renting to students.  We revisited renting to students, and targeted law students (after a couple nightmare undergrads).  We quickly filled the place up at a higher rent than we could have gotten from non-students at the time.

Then, when housing prices plummeted, we lost several more non-student tenants who moved out because they bought houses.  We quickly filled those units with grad students, too.

What worked for us was month-to-month agreements.  Most of my units were small studios.  

There is also a market for short-term summer rentals for students who either come to the college for an internship, or because they have to move out of student housing for the summer.  Your students may want to keep their rooms/units over the summer, but they may be going to an internship in another city/state or even country.  If you allow them to sublet their rooms, with approval, you should be able to keep them rented over summer, even with month-to-month agreements.

I did not deal with roommates as a rule, so I don't have experience in how to handle security deposits, etc., from leaving roommates.  I'll let someone else tell you what works for them on that issue.

If you can target med or law students, they are fantastic.  Very low maintenance.  They're too exhausted to party, and they basically use the unit to sleep and eat.  They also don't want to lose their units over the summer, so they'll find subtenants, in my experience.  With subtenants, I did not get involved in their agreement, and kept the original tenant responsible for the rent.  I just gave them written permission to have a long-term guest.

If you can contact the grad department and find out how to advertise to just the grad students, rather than advertise on Craigslist, etc., you can avoid having to rent to non-students.  I approached the housing person for the law school, and since they never had enough housing, she was happy to advertise my vacancies on their facebook page.

I also gave current tenants a $100 rent credit if I rented to someone they referred.  Not sure if this would work in your roommate situation, but for me, this resulted in a waiting list a good deal of the time.  My tenants would refer people to me, and I didn't even have to advertise a good deal of the time.

If all you have to rent to are undergrads, I'd rethink renting to students.  The income would be there, but the damage would be considerable.  Unless you can get to the low-problem undergrads, like - dare I be politically incorrect - Asian students.