Is renting to college students a good idea?
Many would disagree, but an investment opportunity is an investment opportunity.
Renting to college students can be a rewarding venture, providing a steady stream of potential tenants and a chance to make a positive impact on young lives. However, it also comes with its own set of challenges and considerations.
In this blog post, we'll delve into the essential aspects of renting to college students so that you can understand their unique demographic and needs and how to effectively and safely house them with little risk.
Understanding College Students as Tenants
Before getting into this topic further, it's essential to understand the demographic of college students and how it has evolved. This affects their typical behavior, financial history, and desired amenities, among other factors.
College Student Demographics
Here are the characteristics of a traditional college student:
- Age Range: College students typically fall between the ages of 18 and 24.
- Academic Commitments: College students prioritize their studies, which means they may have irregular schedules and periods of intense academic demands, such as during exams or project submissions.
- Financial Constraints: Many college students rely on financial aid, part-time jobs, or parental support to cover their expenses. This could impact their ability to pay rent promptly.
- Lifestyle and Social Factors: College life often involves a social aspect, with students seeking opportunities to socialize and engage in extracurricular activities.
However, over the years, some aspects of the college student demographic have changed.
For example, while the traditional age for a college student is 18-24 years old, there are non-traditional students who may be older and more financially independent and are now pursuing higher education at different life stages. They might be returning to college after working or raising a family.
Colleges and universities have been making efforts to increase diversity and inclusion on campuses, leading to more diverse student populations. This diversity is also reflected in the demographics of student housing.
On a similar note, many institutions attract a significant number of international students seeking higher education in different countries. These students often require specific accommodations and support services, influencing the student housing demographic.
College Student Housing Needs
Most college students have specific housing requirements. As a landlord, it's essential to cater to these needs to attract and retain tenants in their rental properties.
Some common considerations for student renters include the following:
- Proximity to Campus: Most college students prefer living close to their university and grocery stores to minimize commuting time and expenses. Properties within walking distance to college towns or easily accessible by public transportation are highly sought after.
- Affordability: Cost is a significant factor for college students, so offering reasonably priced rentals or options for shared accommodations can be appealing.
- Flexibility in Lease Terms: College students often require flexibility in lease agreements due to the nature of their academic schedules. Short-term or month-to-month leases may be more suitable for some students.
- Safety and Security: Safety is a top priority for both students and their parents. Providing a secure living environment with proper lighting, reliable locks, and security features can be a significant selling point.
- Furnished vs. Unfurnished: Some college students prefer furnished rentals to avoid the hassle of buying and transporting furniture. Others may already have their belongings and seek unfurnished spaces.
By understanding the demographic and specific housing needs of student renters, landlords can tailor their rental offerings to attract this lucrative market and foster a positive and mutually beneficial landlord-tenant relationship.
Pros and Cons of Renting to College Students
As with any rental market, there are advantages and disadvantages to consider when renting to college students. Being aware of these factors will help landlords make informed decisions and adopt appropriate strategies to maximize the benefits and minimize the challenges of renting to college students.
Here's a closer look at the potential benefits and drawbacks.
Benefits of Leasing to College Renters
- Consistent Demand: College students represent a constant stream of potential tenants, especially in areas with high student populations or universities. Each academic year brings new students looking for off-campus housing, ensuring a steady demand for rentals.
- Possibility of Long-Term Tenants: If your rental property is near a university, you may have the opportunity to retain tenants for multiple years if they continue their education at the same institution.
- Higher Rental Yields: College students often prefer shared accommodations to split expenses, allowing landlords to charge higher rents for larger properties.
Drawbacks of Leasing to College Renters
- Higher Turnover Rates: College students typically rent for a limited period, such as the duration of their studies. As a result, turnover rates can be higher than with other tenant demographics.
- Limited Rental History and Creditworthiness: Many college students lack an extensive rental history or established credit, making it challenging to assess their reliability as tenants.
- Noise and Party-Related Issues: College students may have a more active social life, which can lead to noise complaints from neighbors or potential property damages from parties.
That said, for many of these drawbacks, there are potential solutions. For example, you can consider alternative ways of screening, such as requesting co-signers or verifying financial stability through other means. Additionally, you can implement clear house rules and communication channels to address and mitigate noise issues.
We'll get more into this below.
Mitigating Risks and Setting House Rules for Renting to College Students
Renting to college students comes with unique risks, but proactive measures can help landlords minimize potential issues.
By setting clear house rules and conducting thorough tenant screening with standard screening criteria, you can create a positive rental experience for both parties involved.
Here are essential steps to mitigate risks and ensure a smooth tenancy.
Like with any rental property's standard tenant screening process, you should check for criminal background, rental history, and references.
Most students are first-time renters, but you can evaluate their character through references from other people like professors, advisors, or employers.
When contacting these references, look for signs and insights into the prospective tenants' cleanliness, reliability, and adherence to rules.
Most students also don't have much credit history. However, you can still determine their financial stability by verifying their sources of income, such as part-time jobs, job history, or financial aid, to ensure they can afford the rent payments.
For students with limited credit history of financial means, you can also request a co-signer or guarantor.
To facilitate your screening process, you can consider using property management software like DoorLoop!
Rental Agreements and House Rules
You should draft detailed lease agreements tailored to the needs of college students, covering important aspects like lease duration, rent payment schedule, and shared responsibilities for common areas.
Within your lease agreements for student rental properties, be sure to include policies for the following:
- Noise and Parties: Clearly state rules regarding noise levels, especially during quiet hours. Address the consequences for violating the noise policy to encourage responsible behavior.
- Maintenance: Outline tenant responsibilities for basic maintenance tasks, such as disposing of trash and keeping the property clean and well-maintained. Specify procedures for reporting and addressing maintenance issues promptly.
- Guests: Set clear guidelines for guests' stay duration and limitations on the number of guests allowed at any given time. Emphasize the importance of tenant accountability for their guests' behavior.
As a landlord or property manager, you should always require security deposits, especially for college students; they're generally known to be high-risk renters due to property damage, insufficient income, and other factors.
When setting a security deposit, however, make sure that you familiarize yourself with relevant state and local laws. Follow proper procedures for collecting, holding, and returning security deposits as well.
Determine an appropriate security deposit amount that covers potential damages and unpaid rent, while remaining reasonable for college students' budgets.
Conducting periodic inspections is another great way to protect your investment property and ensure that your student renter is following your lease agreement.
By scheduling periodic inspections at appropriate intervals, such as the beginning and end of each semester, you can address any emerging problems promptly and maintain the property's overall quality.
Additionally, these inspections provide an opportunity to communicate with student tenants, discuss any house rules or changes in policies, and build a positive relationship.
What College Students Demand from a Rental Property
Renting to college students goes beyond providing a roof over their heads. Offering amenities that cater to their lifestyle and academic needs can make your rental property more appealing.
Keep in mind that not all amenities are feasible for every property, so carefully consider which amenities align with your property's location, target market, and budget.
That said, here are some key amenities college students typically look for.
College students heavily rely on the internet for academic research, online classes, and social connectivity, so they should have reliable Wi-Fi access and high-speed internet.
For larger properties, ensure proper Wi-Fi coverage throughout the entire premises.
Consider offering essential furniture items such as a bed, study desk, chair, and storage solutions. Many renters coming to a college town don't come with furniture.
Furnishings should be practical and space-efficient, especially for smaller units or shared accommodations.
Offer flexibility for students to personalize their living spaces while maintaining the property's overall condition.
If possible, provide on-site laundry facilities to save students time and money.
In shared accommodations, consider providing multiple laundry machines to accommodate multiple tenants as well.
Study Spaces and Recreation
Designate quiet areas within the property where students can focus on their studies without distractions.
Create a communal space where students can socialize, relax, and build a sense of community.
If feasible, include a small fitness area in your rental property or access to nearby fitness facilities, as health-conscious students value exercise options.
Bike Storage and Parking
Provide secure bike storage options for eco-conscious students who prefer biking over driving.
If the property is in an area where students drive, you should also offer parking spaces or provide information about nearby parking options.
Safety and Security Features
Students want to be safe in their college towns, and their parents are often worried about their safety as well. Quell their worries by doing the following:
- Keeping the property's premises well lit
- Installing secure access points or keyless entry systems to prevent unauthorized entry
- Installing security cameras
Keep in mind that college students often have budget constraints. Setting a rent price that aligns with their financial means can make your property more attractive.
Consider offering rent options for shared accommodations, making it more affordable for students to live together.
To simplify budgeting for college students, also consider including some or all utilities in the rent, such as water, electricity, and internet. Communicate clearly to tenants about what utilities are covered in the rent to avoid misunderstandings.
Because of the academic calendar and demand fluctuations, there are opportunities for adjusting your rent prices. For instance, you may charge higher rents during peak student move-in periods. During less popular times, you can offer move-in fee discounts or incentives to attract more tenants.
Can You Refuse to Rent to College Students?
As a landlord, you may wonder if you have the right to refuse to rent to college students based on their status as students.
The Fair Housing Act, enforced by the U.S. Department of Housing and Urban Development (HUD), prohibits discrimination based on race, color, religion, national origin, sex, familial status, and disability.
While the Fair Housing Act does not explicitly protect college students as a class, it's crucial to avoid discriminating against potential tenants based on their student status if it intersects with a protected characteristic (e.g., race, familial status, or even age).
In the end, the tenant screening criteria for every person should be the same for your rental property, even if they are a student renter. Base approval on financial qualifications, rental history, and references, rather than solely on student tenant status.
If you have specific concerns or questions regarding fair housing laws and their application to your rental property, consult a real estate attorney or fair housing expert for guidance.
Renting to college students can be a rewarding venture, but it requires understanding their unique needs and challenges.
By catering to their housing requirements, setting clear house rules, and providing desirable amenities, landlords can attract responsible tenants, even in college towns!
With careful planning and a positive approach, you can create a successful and inclusive rental experience for college students, ensuring a mutually beneficial landlord-tenant relationship.