Providing college rentals is a great way to build up or diversify your rental portfolio. Just like renting to a family or single person there are pros and cons. Once you evaluate these factors you can decide if the college rental niche is right for you.
Pro: More Money!!
In some markets, college students with roommates can often live in a house and afford to pay more for it than a single family. So, the return on investment is often greater renting to college students. Many students also have the financial backing of their parents which helps reduce risk of nonpayment.
Additionally, we require one rent check for the entire house. We do not rent bedrooms individually. A point person collects the others’ rent for us and then pays us the whole amount. This requires our tenants to self-police one another to ensure the rent will be paid in full. It also prevents us from having to chase down each person for rent.
Pro: Steady Market of Renters
The population of college campuses may rise and fall some from year to year, but for the most part it is a dependable supply of students who are looking for off-campus housing. Many are returning sophomores looking to move away from dorm-life and into a house or apartment. But not all are young kids. The National Center for Education Statistics (NCES) estimates that between 2010 and 2020 there will be an 11-percent increase in college enrollments by students aged 25 and older.
Finding new tenants is not difficult. Ask your current or outgoing tenants to share news that you will have a vacancy with their friends. There are plenty of bad landlords out there. If you are a good one, your tenants’ recommendation can help you rent out properties by word of mouth. Students often discuss their housing searches with one another and will often know of people looking for a place to rent.
Pro and Con: Predictable, but Sometimes High Renter Turnover
An often-cited criticism of renting to college students is that there is more turnover which creates more work. The increased turnover can be a Con, however, there are several Pros about college turnover. It is reliable, like Christmas or your birthday – it won’t sneak up on you. A college semester begins and ends the same time every year. So be prepared!
- Contact students early to see if they are going to stay or go. We contact them 3-4 months before their lease ends, and we always end our leases right after the spring semester. And we bug them and bug them and bug them until we have a signed lease in place for the next year or they give notice that they are moving.
- We get a new lease signed so that we are not doing a last-minute scramble.
Most of our rentals have 4 students living in them. When one or two students move out we ask the students staying to find replacements. The replacements still must fill out a rental application and get our approval, but this ensures they get compatible roommates. Also, because we rent the house and not the bedroom, they have a big incentive to find new roommates. They want to split the rent as many ways as they can to get it cheaper. If they didn’t find a roommate, they would be expected to foot the whole bill.
College rentals don’t have to turn over every year. If students rent from you beginning as a sophomore or junior, there is potential for them to stay for 2 or 3 years. Some of the students in our House #2 are on their third year there. Additionally, many students are staying in school longer to earn a Master’s Degree which provides the potential to keep a renter for an even longer period of time.
Con: College Rental Wear and Tear
The internet is full of stories about college kids ripping the doors off houses and tearing up the property. And it happens, we have seen it as we look at some of the rental properties that are for sale. Those type of issues are often the result of poor tenant selection or the students’ lack of pride in a sub-standard house. It’s not necessarily a problem with college rentals in general.
There is more maintenance with rentals because—at least in our area—the buildings are typically older.
These properties also experience more foot traffic with friends visiting and parties, and moving in and out every semester all of which cause wall scratches and other minor issues.
But it’s not all bad news. Many of our students have taken a lot of pride in having a nice house. We have had renters do landscaping on their own and other things to keep the place looking nice.
Sometimes college kids can’t make a simple repair or fix an easy problem because they don’t know how. Being the adult in a house is completely new to them. Their parents aren’t around to help them, so if they have a problem with the house, who are they going to call?? Yep, you. The landlord.
Occasionally you get a student that can’t change a light bulb or has never plunged a toilet. This is pretty annoying. But in these cases, we recommend envisioning your next rent check as you stifle an eye roll, play parent, and help them out.