Where are the most lucrative student rentals?

[Lillie Manon]

I am interested into getting student rentals and I have heard of people renting for higher than market value usually by renting rooms instead of the whole apartment or just being able to charge more for the apartment. I know in some towns they limit the number or unrelated people that can live in one house so it limits your options. What areas do you have your student rentals in that You have found to be lucrative? What have been some of the pros and cons of student rentals?

[Roy N.]

@Lillie Manon

Student rentals - flats, houses and by the room - comprise about 60% of our current portfolio.  

If you do a little searching here on the BP forums, the answers to your questions have been discussed at length.

Student rentals can be lucrative.  You can make a solid income providing students with clean, healthy, well-maintained accommodations with, perhaps, some supplemental amenities.   {The longer we do this, the more we are an accommodation services provider - or even lifestyle services provider - and not your traditional landlord}.

The slumlord approach of cramming students into a dilapidated house is {thankfully} a passé notion as students, in most locations, have choice these days.

Renting by the room can produce higher revenues than renting by the unit, but it also comes with more administration: tenants have individual relationships with the landlord and not with each other - as a consequence, you (the landlord) will have to deal with housemate drama.  We find that a student rooming house runs smoothly if you have a resident Den Mother to ensure decorum and responsible behaviour {search here in the forums for discussion of why this is so}.

Location is critical:  Being within walking distance to campus (particularly here where our winters are cold and long) is a big factor when adding student rentals to your portfolio.

Bundle everything:  Lawn care, snow removal, {even} cleaning service, Internet, utilities, etc.   Do not count on students to mow the lawn, shovel snow or, at times, even clean.  We do not rent units with utilities included {students are not always careful with their energy consumption habits}, but we do provide a single payee option where the student tenants prepay their utilities through us each month along with their rent.  We do let rooms with utilities included and the Den Mother ensures no one cranks the heat and opens a window.

Plan for turnover:  Most student rentals last 1, maybe 2, academic years ... sometimes less.  The more individuals on the lease (i.e. 1 - 2 vs 4 -5), the greater the odds of the household's social cohesion coming undone.  Build the cost of frequent turnover into your business model.

Inspect frequently:  We visit our student units at least quarterly ... there are plenty of reasons: smoke/CO detectors, HVAC filters ... in October & November we will be servicing heating systems, inspecting weatherstripping & caulking, etc in advance of winter.   Whenever we find something damaged or worn-out during one of these visits we fix it immediately and, where applicable, bill the tenants.

Get guarantors, (but not co-signors):  Students seldom have sufficient credit or employment history to qualify for a lease on their own (unless renting a room month-2-month).  We require guarantors - typically parents, grandparents or older siblings - whom we screen (credit history, etc) as we would a tenant applicant.  I would advocate strongly that you use guarantors, and execute separate guarantee agreements with those individuals, rather than have them as "co-signers" to the lease.  A signatory to the lease has all the rights of a tenant, including right of access/quiet enjoyment, a guarantor has the right to know if their charge is in financial default and the obligation to pay any outstanding amounts.  It only takes one helicopter parent co-signer to cause a household to unravel.

[Sam Shueh]

Private university. High tuition older homes. Drugs, gangs.... I know one home was condemned as PCB factory.....