College Town Rental Questions - How to set the rent?

[Chris Stairs]

I am a new investor looking for a little guidance on how to market rents and set up a lease aggreement for a college rental.  This is a single-family home in a small college town where my wife and I attended.  The home is presently rented at $1400 to 5 students.  We are doing some rehab adding an official bedroom and extra bathroom.  We believe after the work is complete we could ask $1600 a month for rent of the home for a regular full-year lease to say a family.  However, as a college rental we wondering if this structure would be appropriate:  

5 people - $1600

6 people - $1710

7 people - $1820 (We do not want any more than 7 people in the home.) 

This would be a 10 month lease for the college season.  We plan to use the property as 2nd home for the summer and we do plan on furnishing the home, so use of most of our furniture (Beds, couches, appliances, kitchen table, dressers) would be included in the lease.

Has anyone else structured rents this way and what advice do you have for us? 

[Brett G.]

@Chris Stairs

First, verify your zoning laws for number of unrelated people living together.

Where I invest, the typical rule of thumb is you can get $x per bedroom (depending on how nice the house is, number of baths, location, etc). So a three bedroom rents for 3x, four bedroom can get 4x, etc. I have taken a four bedroom/three bath house making $1200 per month, added a bedroom, and now it rents for $1600 per month.

Also, find out what typical leases are for, time-wise and price-wise in your area. You may be able to rent year round to students without any vacancy.

We don't furnish our student rentals, I don't think it is a typical thing a student rental landlord does.

Not all college towns are the same as far as rentals are concerned. Do some market research to find out what is typical for your area. If you will use a property manager, they will be able to help you on what to plan for.

Good luck in your endeavor.