The student rental market offers excellent investment potential, yet it is often overlooked and even maligned. Marleen Geyen, author of “University Wealth: 21 Success Secrets to Buy and Manage Student Rental Property” shares her expertise and dispels the myths of investing in student housing.
Determining an Ideal Student Rental Property
As with any real estate investment, location is key, and in the student market this means choosing properties located in walking distance of a campus. Geyen focuses on one or two story, three to five bedroom single family (or duplex) units. Generally, these are older properties built in the 1950s or 60s, which in itself appeals to students but makes maintenance costs an important consideration. Four year public universities provide the best pool of potential renters, but be sure to check whether students are obligated to live on campus, typically applicable to freshmen only. Consequently, second-year students are the target tenants.
Leasing to Students
Landlords have made year-round leases the standard for student renters, so there is no gap in rental income over the summer. Check with the university to determine the lease cycle time-frame. Geyen uses a single one-year lease which is signed individually by each student renting a room in the home, so they share responsibility under a condition called “joint and several liability.” Although parents frequently pay for student rent, Geyen prefers to have leases signed by students rather than parents who may be out-of-state. Properties are advertised, through college websites, Craigslist, and the like, as “convenient to campus” rather than “student-housing” in order to avoid violating anti-discrimination laws.
Enlisting Professional Help
Look for a mortgage broker or real estate agent experienced in student housing rental, including any special license or occupancy limitations that apply, or other requirements to convert a single family home into student housing. If you decide to enlist the services of a property manager, be sure they understand this unique market. They should be familiar with student leases, pricing, and the most desirable property features. Using a more generic lease with basic clauses prohibiting pets, parties, and smoking, may help you avoid the complications of a lease that is too specific.
Debunking Stereotypes of Student Rental
The student housing market provides an excellent rent return on investment. A home that might rent for $1,000 a month to a single family could be rented by the room for nearly twice that. Geyen’s own experiences with student renters in the Minneapolis market have been positive, based on mutual respect that includes respect for property. Although she has noticed a propensity among students to amass everything from furniture to pets, aside from the occasional wild party there have been no horror stories.