Student housing: Live-in Landlording

[Alison Kurtz]

Hey, everyone.

For those that I haven't met, I'm a new investor in Central New Jersey. I am considering student housing as a buy and hold option. To all you experienced investors: what are the  potential pros and cons to being a live-in landlord if I purchased a multi family and occupied one of the units myself?

[Roy N.]

@Alison Kurtz

We have several student rentals: student houses (4 - 5 housemates); apartments (1 - 3 bdrm); and rooming houses (fully furnished, within walking distance to two universities, caters to international students).

Screen your tenants well.  Most students are not going to have a sufficient credit history on their own to secure a lease.  Have them bring a guarantor to the table (usually the parents or grandparents) and screen the guarantor.   Some landlords have the guarantors actually be co-signatories to the lease, I would advise strongly against putting them on the lease (which gives them right to access as any other tenant), but execute a separate guarantee agreement with then in which the assume the financial obligations of their guarantee (who is on the lease), but have no further rights ... essentially they have the right to pay the bill if Little Johnny messes-up.

If you renovate with students in-mind (durability, ease to clean, current), you do not need to have high-end finishes (no granite counters), but do use quality, mid-grade materials.  If you provide your screened student tenants with a nice place to live, they will take better care of it than if you provide them with a tired, un-maintained unit - if you have no pride in your property, neither will your tenants.

Establish a set of house rules - ours are a Schedule to the lease (we have a standard form lease here).  When the lease is signed we review the house rules with the tenants and they initial each section indicating they understand their rights and obligations.   Once the tenants are in residency, enforce your rules - students are not much different than my 5-yr old, make an exception and they assume everything else is now negotiable.

Inspect your property at least quarterly - we come in to clean/change filters in the HRV and air-handlers for the heat pumps; check smoke/CO detectors, etc.  We give the place a good look-over.  If something is damaged, we schedule it to be fixed promptly and invoice the tenants once it is fixed (do not wait until the end of the lease to access their security deposit).

We also provide several - value add - services to our students ... we are really less of a landlord and more of an accommodation services provider moving towards being a lifestyle service provider.

If you search here on BP, you will find many threads on student housing.