Hybrid college student rental + STR in the summer? Can this work?

Question

Hello! We are considering purchasing a home in a college town (where our daughter attends school) as a long term student rental but turn it into a STR during the summer and winter breaks. We would write this into the lease that the student's personal items be moved into the locked garage or that they move out 100% for the summer months. Most of my daughter's friends go home for these breaks anyway and most of them said they'd be open to these terms- especially to live in a nice home in a college town. We already pay $900 a month for her shared apartment and this college town (Flagstaff, AZ) is a good STR market with a lot of tourism in the summer and winter months.

Anything to consider other than the simple logistics of turning the rental from LT to ST? Thank you!

Jim Hudelson · Answer

Your strategy is sound enough.  Do it and see how it works for you.  We are in a similar situation with a house in Fort Collins, CO.  The house is about 5 or 6 blocks away from campus in a sweet residential area.  1000 sq feet, 2 bedrooms, 1 bath.  We initially rented it as an unfurnished long term primarily to students.  About 8 years ago we furnished the house and started renting short term.

Our house has a fenced back yard and we allow guests to bring their dogs.  This has been a huge driver for us.  We encourage stays of one month or more with favorable monthly pricing.  This has worked great for us.  Our demographic for renters leans heavily towards 1) older couples who are visiting their kids, who are often having kids, and 2) people moving to the area who need time to shop the market (or people who are building and need a place locally where they can stay atop the process).

I think that Flagstaff and Fort Collins are similar.  They are both groovy places that people want to be and are moving into at an alarming rate.  Graduates try to figure out how they can stay and build a life.  Grand parents like to spend time with the grand kids.  Older people take great care of the house (generally).  Fewer rentals means less housekeeping, less time managing the rentals, etc.

It took a few years for this to come together.  Now the house is usually in demand and does well.  We don't make a killing but we do fine, and we get to use the place when we want.  Mid-winter does not rent well but we still get some bookings.  When the climate is mild the place is always booked.

Just some thoughts for you to digest.

Good luck!

Dave Poeppelmeier · Answer

As a former college student and a current Student Housing investor, I don't see how this is possible outside of your daughter and her friends. To have college kids move all of their furniture/belongings/LIFE, into the garage before Winter Break, after they just got done with Finals kicking their butts, and to have to come back and essentially move AGAIN before the Spring Semester starts... I just don't see college kids doing that. If you're going to do Student Housing, make it a full year lease (if that's the culture in Flagstaff) or make it a STR, but don't try to do both.

John Underwood · Answer

We started off doing that. It was a pain moving out our furniture at the end of the summer.

Just make it a full time vacation rental.

Daniella Lamis · Answer

@John Underwood

Part of our idea is to create an investment that also benefits us- we are paying for an apartment now (in this town) and likely will have more children attending there as well. It will be a pain, but so is writing a $900 check every month for 1 bedroom haha.

Stephen Spradley · Answer

@Jim Hudelson

No kidding. You also got what I like to call the Big 3 in Fort Collins driving some serious job growth; Woodward, Broadcom, and Budweiser. Very popular for the engineering types.

Eric Van Deman · Answer

@Dan Heuschele

Ha ha.  It WAS on mission beach, but was 20+ years ago. We lived in the Surf Rider apartments between Liverpool and Lido, but had friends up and down the beach renting in similar situations.

I’m sure it was easier on you when your student tenants chose the furnished option, but sounds like you were able to give them the option as you had the garage on site. Otherwise, you’d likely need to figure out a moving truck and storage rental for the STR furniture that would cut into the STR summer profits.

Dan H. · Answer

Was the unit on Jamaica court, mission beach?   Just curious if you could have been in one of our 2 units.  Not likely.   We started our 2 STRs in San Diego beach area (Mission Beach) with student housing in the school year and STRs in the summer.  We gave the student tenants the option of using our furniture and taking care of it or lose the garage and provide their own furniture.  Parking is a premium near the beach so most student tenants chose to use our furniture.

We transitioned to full time STR after a couple of years (maybe 2002) but when the Great Recession happened we switch back to this model until the STR market picked up again a few years later.

In 2020, I may have done better as a hybrid but never converted.  Rents were down ~$60k from 2019 levels as rentals were banned from March to June and from prior to Thanksgiving through the new year.  In addition, with attractions being closed including the beach for some of that time, the STRs were impacted even during the time they were permitted to be rented (Increased vacancy and slightly reduced rents).  I do question if students will be willing to move out for the fairly short winter break and if that will result in reduction of rent you can obtain from the students.  It is a hassle.

The thing about summer is many student housing charges for 12 months even though student only needs it 9 months.  If the student only needs the unit 9 months, they can pay 33% more for the unit for the 9 months and have same housing cost as paying the reduced rent 12 months.  We made sure the students understood this because it meant that the student could live at the beach typically for not much more yearly house expense than with the 12 month lease not near the beach.  In summary hybrid STR can work.  Not sure if the winter break STR is going to work.

Good luck

Troy T. · Answer

I’ve been researching this scenario / option as well, though in a smaller market with a small private college nearby. Mainly because the off-season would be pretty slow for a STR on a lake (mid-west winters…) but I think summers would do really well. I think it’s doable as long as you pick your renters wisely. Also think it would be hard to try and rent holidays during the school season, I’d likely just do the full 9ish month lease for the students so moving their belongings in and out isn’t an issue.

Eric Van Deman · Answer

I went to school in San Diego as an out of state student. We rented a house near the beach, the property was furnished, and we had a 9 month lease.  We moved all of our stuff at the end of the school year and the landlord did weekly rentals all summer long. It was actually very common for the beach markets near school to operate that way. If you furnish the place and make it easier on students, I bet you’ll find some that love the idea of not moving furniture, and having a nicer place, while some parents will love only paying for 9 months.

Jim OConnell · Answer

""Part of our idea is to create an investment that also benefits us- we are paying for an apartment now (in this town) and likely will have more children attending there as well. It will be a pain, but so is writing a $900 check every month for 1 bedroom haha"....

Buy the house at the right price (there's the rub in Flagstaff right now) that cash flows enough - make it a STR, take the cash flow, and pay for the student housing. You can block off weekends or times when you want to visit (checkup on) your kid, and maybe even get her to help a bit with the STR management or upkeep. Property management for an entrepreneurial business will look good on the kid's applications when they get out of college.

Hybrid college student rental + STR in the summer? Can this work?

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