College rentals

[Mike Lalor]

I am considering buying a duplex in a college town, about 2 blocks from campus.  Does anyone have experience in college towns renting to college students?  Are they more or less reliable making payments?  How do you determine their income and say even credit scores being so young? any thoughts on this appreciated.

[Scott Ellis]

Hi Mike,  If the numbers make sense for you, go for it?

My wife and I rent specifically to subset of college students—grad students in Physical/Occupational Therapy or the medical fields.  

We haven't done credit checks or income verification, but here's what we do, for what it's worth.  We chose these students because they must go through background checks and drug tests for school since they'll be placed in hospital and clinic settings for their rotations.  So far, all of our students have gotten financial aid, so they budget for rent right up front. Also, they're in an intense academic setting, so they're heads down in books and study sessions ALL THE TIME.  

We use Cozy, an awesome free service for collecting rent through ACH.  In two years, we've never had a missed payment. Also, we manage leases by the room, which typically allows for a higher monthly rent.

The "downside" is that there is turnover, but, for example, we sent a notice to the incoming class last week and already have our six beds filled for September.  Turning over once a year or every other year also lets us deep clean and fix minor things before anything gets too bad.

We've loved it and have no intention of changing strategy any time soon.   Good luck with your duplex