By William Bronchick & Frank Pulley
Whether you are a new or experienced investor there may be times that considering renting to college students might enhance the profitability of your rental. A single-family home with several bedrooms can sometimes yield 30 to 40% more in rental income than the same home with yield as a single-family rental!
Many investors disregard the idea as they may have heard the horror stories of properties being torn up, rents not being paid and many more issues caused by students renting your properties.
Although these issues certainly can happen, they also can occur in single-family or multifamily homes. The secret is really having your ducks in a row; with solid leases, policies, and procedures. In addition, you have to add things like requiring renters insurance and a thorough screening process. If you are worried that the tenants won’t pay, make sure you have solid co-signers such as the students’ parents or require a substantial amount upfront if the rent is being paid out of their student loan.
For those faint of heart, a property manager experienced in handling these types of rentals might be a huge asset!
Research! First of all research your area to make sure that you have a sufficient market for your rental property. Also, make sure that you have amenities that college students want and desire. (We’ll discuss those in a minute)
Also, do some research on other local student college rentals and see what the market rents are. You have to make sure that you make a nice profit on your investment. Typically with more people in a property, the higher the repair and maintenance expenses.
See if there’s a market for both the long-term rentals of the college school year and short term rentals for those either staying in town for the summer or taking summer classes.
Local realtors can be a great source of information about not only the market but also of potential properties for sale. Sometimes poorly managed properties can be purchased for a great deal. You can then go in, renovate, put policies in place, evict bad tenants, get good ones and substantially increase the value of the property!
Obviously you want to be in a location within a short distance of the campus. College students tend to stay up late for a variety of reasons (study or party?) and thus like to be able to reach their classes within about 15 minutes by either walking or bike.
College Student Wants. College students normally are less demanding about the condition of the room and property. Obviously they want neat and comfortable, but they don’t want or Need fancy flooring or brand new appliances. Normally you don’t have to put as much money into a college rental as a standard single-family home rental.
There are a few things that college students will demand: plenty of hot water (having more than one bathroom is a great idea) washer and dryer and good Internet with a good provider and fast speed. Having plenty of electrical plug-ins to accommodate their variety of accessories including stereos and computer equipment is a must along with the necessary electrical service. Lots of closet space in the bedrooms is desirable as is having a large kitchen with a large refrigerator and plenty of cabinet space.
Marketing Your Rental. Last but not least, you have to efficiently and aggressively market your property. Make sure you are on all of the appropriate websites. Visit the college(s) near you and make sure you are on their list of available properties to rent. Placing flyers on the college bulletin boards is a great idea too. Word-of-mouth is great to offer a referral reward for students that bring in someone that actually signs a lease.
Renting to college students isn’t without risks, but with proper planning and execution can be a lucrative endeavor!
President and founder of the Colorado Landlords Association, best-selling real estate author and attorney, landlord and real estate investor with 28 years' experience.