When it comes to rental properties, there’s one thing that scares property managers more than anything: college students.
Renting to college students is a necessary risk for every property manager. While most landlords would prefer to avoid it, sometimes there’s no way around it. In the end, filling vacant units is the ultimate goal. Like most situations, there are pros and cons to renting to college students.
What’s the Risk of Renting to College Students?
College is a period of life where bad habits and late nights are considered normal. There are several inherent risks involved with renting to college students:
Partying is the biggest concern for property managers. Some people might think, “what’s the harm in a little partying?”
For a property manager, partying introduces property damage, noise complaints, cop calls, liabilities, and more. If a tenant hosts a party, there are increased risks all around.
As many former college students can attest, parties can get out of hand. Types of property damage include (but are not limited to): carpet damage, hardwood floor damage, drywall holes, broken windows, mold, and more. Those are some of the most common damages, but there has been worse.
In most cases, the resident is responsible for any damages beyond wear and tear. The more catastrophic result of parties would be the neighborhood reputation that your rental will get from a partying culture. You don’t want your house or apartment complex known as the place with loud, boisterous parties. This can lower the value of your rental, which will most likely put you at the mercy of college student residents for the foreseeable future.
On top of that, your inbox might fill up with angry emails from neighboring homes and units. Nobody wants to spend their day responding to emails about loud music, messes in the street, or police calls.
Defaulting on Payments
Payment default is a risk with any tenant, but particularly those with no source of income. Many students are paying their rent with the help of their parents or loans. While help may be involved, you are still relying on these students to be responsible with their money.
Student leases rarely last over a year. Attending college is an ever-shifting landscape. Students graduate, transfer, and drop out constantly. When any of those things happen, they are probably moving out of their apartment. On top of those major changes, students are invariably changing roommates and apartments because of differing financial situations.
The increased turnover rates inflate the amount of work that is required of the property manager. More paperwork, more make-readies, and more headaches are just a few of the results of student turnover.
You also have to worry about the prospect of your tenants allowing other people to live with them without you knowing. You’d be surprised how many tenants aren’t listed on a lease. Students tend to think it’s okay for their friends to live with them, despite not telling their property manager. This type of living situation is dangerous for all parties involved.
Students also have a knack for subletting their room without a landlord’s permission. They think it’s harmless to rent out their room for the summer, even though they’d be responsible for any damage that their temporary replacement causes.
Not Taking Care of Property
This doesn’t apply to every single student, but a good chunk of them aren’t aware of how to take care of a home yet. We all know what it was like to be in college. Dishes would pile up, trash cans were always full, carpets get stained, etc. Younger tenants are more likely to ignore their chores when they don’t have their parents nagging them to get them done.
What are the Benefits of Renting to College Students?
Renting to students isn’t all bad. Check out some of the benefits of renting to students:
Low Vacancy Rates
Areas with students constantly have people moving and looking for new places to live. That means empty apartments don’t stay empty for long. University areas may have higher turnover rates, but vacant units fill up quickly. On top of that, marketing empty units become easier. Campus directories and message boards eliminate listing costs.
Since there are so many students looking for places to live, the demand is high. When the demand for living spaces is high, prices can be driven up (especially closer to campus). Units with multiple rooms go for higher because they are most likely going to be a split cost among roommates.
Student renters typically have lower housing standards than families and people in the job market.
Non-student renters have a higher level of income, a broader range of locations to choose from, and pickier tastes. College kids just want a bed, a roof, and a microwave. As long as they have access to wifi, they will be happy.
Now, that’s not a free pass to be a terrible landlord. It just means they aren’t going to require updated appliances, brand new carpet, granite countertops, etc. You can skip some of the trendier updates and save some money.
How to Select Student Renters
Before we dive into any information about selecting renters, you should educate yourself on the regulations contained within the Fair Housing Act. The Fair Housing Act protects people from discrimination when they are renting or buying a home, getting a mortgage, seeking housing assistance, or engaging in other housing-related activities.
FHA protects people from discrimination based on race, gender, familial status, religion, nationality, disability, etc. Experienced property managers should already be familiar with this act, but I wanted to place it here for safe measure. With those things in mind, you can start vetting students for your rental.
Your first (and most important) step will be showing them the unit personally. You can get a pretty good idea of a person’s character just by walking around a unit with them. You can also use that opportunity to ask them questions. You want to avoid discriminatory questions, but you can take this time to get to know this person as a human being.
Secondly, pen a lease agreement specifically for college students. It should include everything that we mentioned earlier. That way you get them to agree to your rules in writing. If you aren’t familiar with all of the terms on a lease agreement, check out this list of commonly rental agreement words. Here are some clauses you will want to include in your agreement, just to name a few:
- No partying, smoking, underage drinking, drugs, etc.
- No subletting without approval
- Specific payment dates
- Require a cosigner
- Require Renter’s Insurance
You should go over this student lease agreement with a lawyer so they can help you find anything you may have missed. It might not completely prevent students from breaking the rules, but at least you have it in writing that they are agreeing to your rules if liability or court ever come into play.
Next, do a quick social media search for any applicant. If the applicant’s profile picture is him with a beer bong, that might be a red flag.
Lastly, you should require personal references. Clarify that it needs to be from someone other than a friend or family member. Whether it’s one of their professors, a boss, or an old teacher, it will be a good way to evaluate whether or not this student will be a good fit for your vacant unit. Students should be able to offer a few of these to future employers, so think of it as doing them a service.
In the end, proper preparations, expectations, and ground rules can make renting to college students a worthwhile risk. Do you have other thoughts or questions about renting to college students? Let us know in the comments.
Anything found written in this article was written solely for informational purposes. We advise that you receive professional advice if you plan to move forward with any of the information found. You agree that neither Lula or the author are liable for any damages that arise from the use of the information found within this article