Contrary to popular belief, renting to college students doesn’t always mean having to deal with beer, parties, and loud music. In fact, 74% of those attending college these days are considered “non-traditional” and fall outside of the typical 18- to 22-year-old demographic. According to an article by npr.org, colleges have been largely non-traditional since 1996 and many students fall into one or more of these categories:
Thus, renting to college students can be a profitable move as many potential renters are more likely to have a stable income and good credit or rental history. Ideally, college students should pay no more than 30% of their monthly net income for rent. However, according to the Bureau of Labor Statistics, 32.8% of the average expenditure per consumer went to housing, making it the largest expenditure for 2018. So, as schools are beginning to restart, it can be advantageous to invest in college town real estate.
As with any venture, there are attendant risks when renting to college students. Some of these include common concerns such as noise complaints or partying. Lack of credit history and being inexperienced with paying bills on time are also issues that can arise. Most college students also leave for the summer, which may cause vacancies. While these risks are present, there are ways to mitigate them and ensure that your rental process flows smoothly.
That said, here are some of the best tips you can follow when renting to college students:
For renters who don’t have rental history, requiring a co-signer or guarantor can be a great option for landlords. The co-signer, such as the student renter’s parent, signs the lease and is responsible for unpaid rent, rent fees, or property damage in case the student renter can’t pay. This is very common for student properties, and it’s one way you can prevent late rent payments. This also ensures you get paid should extensive damage be caused by the student renter.
Additionally, since a family member is responsible for their rent and other related fees, student renters will be encouraged to make more responsible decisions.
Requiring a co-signer might not be needed for student renters who have rental history or steady income. However, this can still be extremely beneficial. Screen co-signers as you would normal applicants since you need to be sure they’re financially qualified to take on the responsibility of paying in case a student renter can’t.
Student renters usually get roommates to afford housing. However, this type of setup can be easier to handle if you implement individual leasing. Also known as renting “by-the-bedroom,” this type of lease requires each individual to pay a set amount every month instead of holding the entire group responsible for the collective rent. Each individual is also held accountable for damages to their own room or common areas instead of the whole house or apartment.
With individual leasing, each renter is protected, and nobody has to pay for damage they didn’t cause. Landlords also benefit from this setup as they can easily rent out an empty room should a tenant break their lease, leave early, or become evicted.
Since you may be dealing with some inexperienced renters, both you and the potential tenant would benefit from clearly outlined house rules or explicitly stated terms of the lease. As long as you adhere to local and state laws, you can craft your lease in a way that clearly communicates what you expect of the student renter. Some of the concerns you can address include:
It’s important not only to be very specific about outlining these rules but to also state any consequence that may arise from violating them. What’s important is to communicate everything clearly and minimize instances of misinterpretation. The clearer your terms are, the easier it would be for both you and the student renter to avoid problems in the long run.
Renting to college students can be a successful venture provided you understand the risks and take appropriate steps to mitigate them. Aside from these tips above, take time to screen potential tenants to avoid late payments, property damage, and frequent turnovers. Similarly, consider having your tenants sign 12-month leases to avoid vacancies during off-season months like summer.
If you need help renting your property, contact one of our property managers to learn how we can help!