Landlords, if you own rental properties in Chapel Hill, Charlotte, Durham, Greenville, Raleigh, Wilmington, or Winston-Salem then you have the opportunity to rent to college students. This can be a very lucrative source of rental income. There are some pros and cons of renting to college students that you should be aware of before you commit your resources to this avenue.
Risks of Renting to College Students
It is often the fear of the risks that keeps landlords from renting to college students. How about we consider some of the risks.
No Rental History
Most landlords have a pretty strict rental qualification process which includes a credit score, rental history and steady employment. Well sorry to say but your college student will probably have none of that. It is hard to know if that college student is going to be a responsible tenant.
College students have a bad reputation for throwing raucous parties and trashing their digs. This adds up to additional wear and tear on your rentals – especially if they are furnished.
Unless the neighboring properties are also college rentals, you could expect to get a higher than average number of phone calls from cranky neighbors filing noise complaints. In some instances, the police may need to stop by the property to keep the peace.
Lack of Communication
This is probably the first time that college student has had to be responsible for the upkeep and maintenance of their home. Many fail to see the need to call the landlord when a faucet leaks or if a railing gets broken.
During the summer, you can expect a percentage of your tenants to vacate the unit and head home. This can mean that you will need to fill your units before each school year.
This is the first time most college students will be on their own. This could create a much higher than average call volume from your tenants. They will have questions on the simplest of things – like how to work the garbage disposal or how to change a lightbulb. You can also end up playing mediator to disputes between the occupants of your rental units.
Just because your lease says “no pets” doesn’t necessarily mean that your college student won’t fall for that cute fluffy dog that quickly grows up to a couch tearing, claw scratching bulldog. Inexperienced pet owners can often do more damage than the wild partier.
Benefits of Renting to College Students
Let’s now look over the benefits of renting to college students. There are several reasons why you, as a landlord, will want to seriously consider renting to college students.
As long as there will be college students, then there is going to be a steady demand for college rentals. A lot of students do not want to live on campus and hence they look off-campus for rentals. It is quite common that student populations can account for as much as 25 percent of a town’s population which creates extremely high demand.
Renting to young adults who are just learning how to balance their budget can be a fearful thought for a landlord. Not to worry, you have a backup. Your lease agreement will have a co-signor that will guarantee payment. Since most parents are paying the rent anyway, there is little to worry about. What parent wants their kid kicked to the curb because they didn’t pay the rent on time? What is more, many students will be receiving financial aid that helps with housing.
While there is the potential for high tenant turnover during the summer, your college renter is typically going to need housing for 2 to 4 years. If you get your lease renewals out there quick or offer an incentive for a long lease, you will have fewer vacancies and a more stable rental income.
More Rental Income
When you lease to a standard tenant, they rent the whole unit for one set price. Renting to college students is different. They rent by the bedroom and then have shared use of the other rooms of the house. This means that you can easily get more income than with a standard lease. Imagine you have a 3 bedroom house that rents for $1,500 per month. Now you rent it to three college students for $600 each. You are now earning $1,800 per month.
How to Minimize the Risks and Maximize the Benefits of Renting to College Students
The additional rental income plus the high demand can often outweigh the risks associated with renting to college students. There are steps, however, that you can take to minimize the risks of college student renting. In our next article, we will share some tips to how you can protect yourself and your investment property when renting to college students.