Renting to students used to be a landlord’s worst nightmare. All night parties, police raids and trashed properties made anyone except shadier landlords steer clear of college areas renters. But as the rental market continues to heat up and demand for properties increases, renting to students can be profitable and rewarding – but some special considerations apply.
Establish Clear Guidelines in the Lease
As with any landlord-tenant relationship, clear guidelines set down before you even hand over the keys can forestall many kinds of issues. That’s especially true if you’re renting to college-age students who may be winging it on their own for the very first time. Make sure the lease is custom crafted to cover all the issues related to the property and heads off typical problems, as well as the specific ones related to the situation.
It may be helpful to talk with other landlords in the area to find out what their biggest issues are and how they solved them. Require application fees and deposits, and be prepared to act if those rules are violated.
Check Credit Carefully — If You Can
Student renters differ from their older counterparts in terms of credit worthiness and income sources. Students may not have built up much credit in their own names. Their ability to pay rent may depend on stipends, scholarships or work0study grants. Perhaps a parent is footing all –or part – of the bill. Establishing ability to pay may not be as simple as a standard credit check, and references from previous landlords are probably non-existent. When in doubt, ask for parents’ names
Who Lives Here? Make It Clear
If you’re renting out a standard single-family home, or even a unit in a multiplex, establish control over who gets to live there. A friend needing a place to stay for a month, the people who crashed on the porch because they were on their way to the coast, or the party that didn’t end for a week can put people in the house who aren’t paying rent. Get your renters on the lease and establish a clear policy setting limits about others who can –or can’t –stay.
Maintain Oversight
With responsible tenants in place, many properties largely run themselves. Your college area student rental may not be that way. It’s important to check in frequently and see the property – or have a responsible manager do so. Student renters may not report needed repairs or other problems – and you may not find out about the damage they’ve done to the place until too late.
Don’t Be the Friend Who Collects the Rent
Keep a processional relationship with student tenants. Don’t become a surrogate parent, counselor or best friend. You’ll need your authority in case of a problem or emergency, and keeping a courteous but working relationship helps smooth out problems along the way.
Student renters may not be around long. There’s a high renter turnover in houses near colleges, and that may mean some additional headaches for a property owner. But college towns offer a steady supply or renters, some of whom may stay in a rental for all their college years – and a good reputation brings in good student renters. College age tenants may not be for the faint of heart but if you’re building wealth in rental property as Jason Hartman recommends, they may offer some unexpected rewards. (Top image: Flickr/jlevine)
Jason Hartman is the complete solution for real estate investing. Read more from our archives:
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