Student Housing vs Regular Tenants

[Jonathan Frausto]

Hello BP community

I was wondering if anyone owned any student housing or student apartments for a university/school?  

I am recently under contract with a two unit across the street from a 4 year university and I'm trying to see what goes into having it rented out to students vs regular tenants. Does the university want a cut of the rent? Does the university have regulations? Do you, the landlord, normally pay for some nicer amenities like internet and a desk to cater to students and charge premium rent?

I understand there's pros and cons to student housing but just wanted to pick your brains and see your input

Thank you in advance!

Jonathan

[Andrew B.]

I've never heard of partnering with a university. typically people who rent to students decide if they want to provide furnishings or not and then decide if they want to rent by the room or the whole unit. by the room has more room for profit, but more work and headache. when I was in college, me and my friends rented a place as a group and brought our own furnishings.

[Jonathan Frausto]

@Andrew B. Thanks for the reply! I completely forgot about renting per room. Unfortunately like you said, more headaches as I would need to add another bedroom for a full 3 beds downstairs instead of 2. Furnishing would be nice also too, but I'd have to play with numbers to make sure I'm not over doing it. Thanks for you input!

[Thomas S.]

Student housing is primarily much more management intensive, guarantors are mandatory and that adds a additional level of headaches to the operation at times.

How you operate is your decision although students are fairly well informed about the market. Rent is based on the market per room and codes will limit the number of non related persons living together.  Make sure all tenants are collectively responsible for the entire rent not individually for their portion. When one (or more) leave at Xmas you want to keep collecting the entire rent. Also make sure rent is plus utilities unless your market does not operate that way. Your market also dictates the lease term. It is preferred that students sign a 12 month term but some markets operate on school terms. 

Expect more damage and much more hands on supervision on your part.

[Jonathan Frausto]

@Thomas S. Thank you very much! Student housing does sound a little bit of extra hoops you gotta go through. It sounds to me to just rent out the entire unit and if they happen to be students then so be it, or if it happens to be a family then that's great too. Thanks again for your input! I appreciate it all!

[Thomas S.]

Student housing is a knish market. You will either love it or hate it.

Too much work for me. Dealing with children and entitled parents is demanding and definatly not my cup of tea.

[Andrew Johnson]

Jonathan Frausto I own apartments near a university. I don’t rent to “only students” but do have students as tenants. I think there are huge differences when you look at unit quality and unit type:

1.) Quality: If you have a mediocre quality unit it’s going to get thrashed. There’s nothing to “keep nice” and if students are renting cheap to save their beer money, well, you can take if from there.

2.) Type: My 1 bedroom/1 bathroom units get returned in great condition. I’m guessing that it’s because nobody is throwing their kegger there. Every time I’ve looked at an SFR for sale within a block of the university it’s been crushing. Patched holes in the walls, not much attention to flooring, from lawn has occasional tire tracks, etc.

By the way, I’m not saying that you can’t make money renting those thrashed homes and host keggers. You just need to manage and update them appropriately. Where I think the *most* risk sits is in the middle of the road. Not nice enough to command higher rent and keep nice but not bad enough to run like a party house. Not that you run it like a party house, you just accept that the house will get treated as such.

[Jenifer Kynor]

Hi Jonathan, 

I worked for the student housing I actually lived in. Everything was a "packaged deal" furniture, internet and television (a TV came with the home too), and students paid a LARGE premium for the convenience. However, the amount of damage and work to be done during turnover is ridiculous. Be prepared to spend your time between July and August replacing and fixing most of your units. 

Because a guarantor is required, late payments were never an issue.. but the damage done is excessive. Unfortunately in my situation, there were a lot more properties that were destroyed then well-kept. 

[Colleen F.]

Across the street from a university can be a negative for non-university renters. This is particularily true if there is traffic or another university activity. With your proximity the best target market may be older students, new faculty or staff. Foriegn students, relocating grad students with families. This decreases issues related to turn over. Not every student even undergrads trashes your place but you tend to hear from people about those who do.

[Kurtis R.]

I worked in student housing for a number of years, primarily as a manager of a 780 bed property (a mix of 2, 3,and 4 bd Apts, all rented by the room). Most of the key points have been touched already, renting by the room, furnished/unfurnished, guarantors and dealing with parents. But another thing that needs to be considered when renting by the room is roommate matching. Depending on the number of units that you have this may be something to consider. 

Often times people will move to a new school without knowing anyone and can't afford to live by themselves. We would have tenants fill out a short "about me" questionnaire and we would attempt to match roommate based on similar interests. Sometimes this would work out, but other times it would blow up. There were many times that I had to act as mediator between roommates and help them work out their differences.  Just something to consider if you rent by the room and have a group of 3, or 2 that show up to rent your 4 bedroom apt.