ff-campus housing is a high demand item with many students. This can create a very lucrative investment opportunity for landlords looking to capitalize on this income stream. If done correctly, you can dramatically increase the rental income you can receive from leasing to students rather than to others. This article is going to show you how to make a success of college town rental properties.
High Demand plus Third-Party Payers
Colleges are a steady environment. They will always have students and students will always need housing. This can create a high demand for rentals and keep the prices high. The downside, however, is the frequent turn-over. You can expect to trade out tenants each year. There can also be a lull in renters during the summer season.
Another attractive feature is that most college students have their parents as financial backers. This means that you can expect to get your rent each and every month. The last thing a parent wants to worry about is where their precious daughter will live if she gets evicted for non-payment of rent. Make sure the parents are on the lease agreements as co-signers.
Rent by the Room not the Whole House
The primary difference between renting to students and to others is that the house is rented on a per bedroom basis rather than a flat rate for the house. Say for example that you have a three bedroom home that rents for $1,200. Why not rent it to students at $650 per bedroom. Your total monthly rental income jumped up to $1,950.
Another benefit of renting by the room is that each tenant/resident has their own lease. Each is responsible for their own rent. They don’t pay, you evict one tenant but the other two get to stay. If one tenant moves out, you do not need to alter the lease for the other two. You just rent out the vacant bedroom.
Set Out the Rules in the Lease
College students are not known as the wisest, most well-behaved and courteous of people. The fear of property damage deters a lot of landlords from even attempting to rent to college students. You can protect yourself from this. First, charge a higher security deposit. Most laws state that you can charge the equivalent of one month’s rent. At $650 x 3, the security deposit will be $750 higher than if you rented your home to a family.
Another protection is to clearly state the house rules and their penalties in the lease agreement. No pets; quiet time after 11 pm; and a limit to sleep-over guests can help keep your rental from turning into a frat house. Clearly state what is and what is not permitted. Think about all the stupid things you did when you were in college and then include them in the lease. It could include rules like not climbing on the roof; not shooting fireworks off on the property; or no bonfires. In addition to having them in the lease, create a property rules sheet and hand it to each tenant when they sign the lease and then place a laminated copy on the back of the entry door, like at a hotel.
Screening prospective tenants will require a more creative approach since most do not have much credit. You can call the college or university and ask the housing administrator if they ever evicted this tenant from any student housing. Don’t forget to have their parents co-sign.
Owning rentals in a college town can dramatically increase your rental income. By applying these suggestions, you will have less worries and more income.
Also Check Out! 10 Essential Lease Terms When Dealing with College Students