For the real estate investor, there can be far more opportunities to grow your portfolio than just single-family rentals. By targeting demographics, it is possible to build a portfolio, or at least a segment of your portfolio, designed to attract a certain age demographic. It seems like a logical decision! We know that properties with seniors in mind are a great asset, but there are more niche demographics that can be targeted for valuable tenants and real estate investing at a slightly different pace.
College students are big time renters. Some investors fear their property getting trashed via wild parties, but renting to college students doesn’t have to mean cleaning up after frat parties. Undergraduate and graduate students are bountiful and often look to the privacy offered in a rental compared to that of a dorm.
So what are the unique challenges and opportunities found in renting to college students for the real estate investor?
The Pros to Renting to College Students
Good Return on Your Investment
While your single family home can have a monthly rent of $1000, you can get far more by renting by the room to college students. In many cases, friends will want to share the rental property as opposed to having a big house to themselves. They’ll be splitting the cost, but you can charge rent by the room. It’s still a reasonable cost for the individual student, but ultimately more profit for you.
The number of college students only continues to grow over the years. There are students always looking to find rental properties. The most important element for you is location — your property should be a relatively close commute to campus, particularly for undergrads. Three to five bedrooms are ideal. Remember that your housing should not exclude other types of tenants (fair housing laws!) just because students are your target. Market your property with phrases like “close to campus” instead of labeling it as student-housing.
The Cons of Renting to Students
Short Lease Cycle
You really have to play to tune of the university’s schedule. Most students move in during the Fall and Spring (Spring really meaning mid-January to early February, depending on when the college starts the new semester). If you miss that window of opportunity, it will be very difficult to fully rent out your property during other points of the semester.
You won’t get long-term tenants here. At most, students will stay in place for a few years, until they complete their degrees. Some may get married, transfer or move. You may risk having an empty property at the end of each school year.
More Maintenance Needs
While not all students throw wild parties, some do. Most college students are used to their parents handling things, which includes cleaning and maintenance chores. They may not even be aware of some of the expectations you should have for property maintenance. This means extra-vigilance in paying attending to maintenance needs.
Similarly to maintenance issues, students aren’t used to paying rent. They may be late or forget entirely if their parents are not paying for it, particularly over holidays or the summer. You can help them out by offering friendly reminders before major holidays like winter, summer and spring breaks.
While renting to college students offers some unique challenges to you as an investor, there is also a great opportunity for your investments and your bottom line to take advantage of their unique place in life. What’s most important to keep in mind when renting to college students is to communicate with them. Let them know your expectations and terms clearly. Be patient with them. You’re helping them learn how to navigate the real world, which can be a daunting experience for them.
Would you rent to a college student? Tell us why in the comments.