All Forum Posts by: Steve Potash

Student rentals are not any easier or harder to manage than a typical rental.  You just need to know what you're doing.  A lot of investors/property managers think they can apply the same techniques that they've used on a typical rental to a student rental, but it can't be done succesfully and they're normally the ones stating that student rentals are harder to manage or there's more damage.  For example, you need a lease specific for student rentals, the screening methods are different and the leasing timetables are different.  You also need to understand what the students are looking for, so that you don't purchase a rental that isn't in demand.  If you purchase the correct rental and understand all of the techniques and processes, student rentals can be more profitable than a typical rental.

Where we invest, the student rentals are inspected by a housing inspector, so it definitely would be caught if the number of bedrooms is greater than the ordinance.  Plus a 8 bedroom or even 6 bedroom house is normally considered a party house, because it's exactly what the partiers are looking to rent...the bigger the better.... so you better screen extremely well.

Also, we used to do individual leases 20 years ago, but the majority of landlords switched to one lease that they all sign, because of the issues with individual leases.  

I am not a lawyer, but you definitely need to follow the fair housing act.   Make sure you're ready for problems that might occur like these.....for example... guy roommate walks into bathroom while female roommate is in the shower, guy roommate walks into female's bedroom while she's sleeping, guy roommate goes through female roommates things while she's at work/class, etc.... they're going to be calling you, because you put him with them even though they told you they weren't comfortable with him and now all 3 of them want to move out because he's invading their privacy and there's no way they can live with him. 

What does the individual lease state regarding renting the other rooms.  Does it state that you can rent the rooms to whomever you want, or that the other individuals/renters need to give their approval.  Also, what did you tell the females when they were signing the lease regarding the other rooms, I'm assuming they asked about potential roommates?    For me, I would never put a male roommate with 3 female roommates, where the 3 female roommates did not give their approval and do not know the guy.  I've owned student rentals for 24 years and there are too many potential issues, when you just "shove" people together especially of the opposite sex.  I would tell the other 3 females to try and find a 4th roommate that they would feel comfortable with... but that you'll be looking also for a female roommate.

If you're a newbie and want to invest in Jacksonville... pick only 2 areas of town and become an expert in those areas.  I've seen several newbies never get started because Jax is huge, so they never get focused and can't determine what's a good deal.  Also, go to a Jaxreia meeting, there are a lot of knowledgeable investors and there are numerous classes that we all teach (disclaimer: I'm on the board of directors and don't get paid).

Most landlords and property managers don't know how to screen correctly for student rentals.  They think they can apply the same screening methods as a normal rental and that's the problem.  If you screen correctly and have a decent property, undergrad student rentals can be the same risk as a normal rental.   On the flip side, the landlords that don't keep up their properties and don't know how to screen end up with the partiers and the huge damages.

@Jason Bott could you send me info about the new student rental policy also... ours skyrocketed this past year.  Thanks...

We're larger and screen our tenants, so it takes us until spring break to fill up.  If we weren't screening as much and taking anyone, we'd be full around winter break.   If a student rental isn't full by July, it's normally a sign that's there's an issue with the property, the manager.... or it could be that a lease was signed, but then the students got dismissed from the university, etc... but in any of these cases, you're still stuck trying to find someone at the last minute, so your potential tenants are limited.  This is one of the reasons why student rentals are tricky and you need to really understand the business, because the numbers might look great, but it could still be a bad deal.

You analyzed the deal correctly and your concerns/issues are valid.  I'd look for a better deal, because they should have already had tenants in place for the upcoming school year.  Your risk is that school is about to start, so there's a good chance it will remain vacant for an entire year resulting in a huge negative cash flow.