Renting to College Students: What You Should Know

Rental properties located in college towns & cities can be fantastic investment opportunities. The thing is, many landlords overlook or pass on these areas because of the type of properties and tenants they perceive to be there. College students are typically young, unemployed, immature, and don’t have a credit or rental history! How is a landlord supposed to work with that! Well, even with all that, renting to college students still presents benefits to the savvy landlord.

The Benefits
1) Recurring High Demand in Area 

Maybe the nicest thing about owning rental property in a university or college town is that you can guarantee yearly demand for housing. While the cost of secondary education has risen, there are still more students attending college now than ever before, so the demand for housing near campuses isn’t going anywhere yet. College students typically lock in housing well before the school year begins too, so landlords can often sign leases in advance of a vacancy. 

2) Possibility of Higher Rents

Rents have gone up across the board anyway, but why do college students/rentals make it possible to charge even higher rents? First, it’s because proximity to campus is in high demand. But there is also the fact that landlords owning college rentals can rent them out room by room. So where a 3 bedroom unit rented to a family might bring in $1,500/month, that same home could be rented to three separate individuals leasing their own “room” for $750/month each. That would net you an extra $250/month right there! 

3) Low Marketing Costs

With the high demand for rentals in college towns, there is usually a lower cost to market your units as well. Colleges usually have an off-campus housing site where you can list your property for free, and signs/word of mouth work quite well in a more compact and connected community like a campus. You also won’t need to impress them as much with professional photos or over-the-top descriptions! Keep your marketing simple and cost-effective.

4) Stable Source of Rent

If we’re honest, most students don’t pay their rent while attending college or university! They typically receive a financial aid package or parents/family foot the bill. While generally speaking you would not want a non-paying tenant, in the case of college students, these other forms of payment are often more reliable! If you rent-by-the-room as well, you will almost always be guaranteed some rent coming in, even if one of the tenants becomes a payment problem.

5) Less Frequent Repairs & Upgrades

Students don’t need a whole lot of upgrades of fancy do-dads. They need Wifi…and a microwave oven! Seriously though, an investment property in a college area will generally need to do fewer updates and repairs to get tenants in. College kids don’t need the latest kitchen and bathroom updates, which over the years will save you time and money. College students usually just have lower expectations about what they are renting.

The Downsides

At Robert C. White & Company, we manage a few college area rental properties for our owners and they tend to do quite well! While there are many positives to consider, here are two potential downsides to owning investment property near and renting to college students:

1) No Rental History or Experience Maintaining a Property

“These kids have no idea how to take care of a house, how can I let them rent this place?” A typical sentiment for investors and landlords. The thing is, this isn’t as big a deal as some think. For one, as we mentioned before, college-age tenants don’t have very high expectations, so if there are scuffs, dents, and dings on the wall, you can get by without repairing or updating the unit as often. You should also require a cosigner for any college renter, which gives you a bit of added protection as the parent is now financially responsible for the lease and abiding by its terms, like not destroying the place. 

2) Higher Turnover Rates

Renting to college students also means higher turnover rates! You may get a year or two renting with a particular student or group of students, but you can prepare for that! The best way to make up for this is by having a tried and true marketing plan whenever a vacancy occurs! You should also be able to lock in higher rental rates for individual rooms, and that extra rental income can help keep your investment cash-flow positive if and when you have to deal with multiple vacancies at the same time!

The Scoop

All-in-all, there are a lot of good things about renting to college students! There is high demand in the areas they are searching for, rent is better guaranteed through financial aid or parents, and you can usually charge 10-20% more in rent. Don’t count out investing in a university town just because you’re wary of the students. 

And, if you don’t want to manage on your own anymore…you could always give the professional property managers at Robert C. White & Company a call.

(860) 200-3331 to reach our property advisors directly!