There is a big demographic that many people come across when renting housing: college students. In some areas, that demo can be quite large. It is a sizable number of people who generally don’t have the funds to purchase housing, and probably wouldn’t since they may not live in that area for more than a few years. As a landlord or owner, what are the considerations when renting to college students, lease agreement addendums and terms to consider, and general ramifications of renting to this group? There are a lot of considerations.
As premiere Washington DC property managers, we know that managing tenants can be a tricky business. You want it to be a profitable investment and provide nice housing for qualified renters. So, how does renting to college students change your situation? It doesn’t entirely. But catering to that group does create all kinds of unique benefits and drawbacks. Let’s explore a little deeper. In this article, we will address the following:
- Pros and Cons of Renting to College Students – We will go over a few of the basic benefits and drawbacks that often come with renting to college students.
- Renting to College Students Lease Agreement Terms to Consider – We will outline a few common lease terms that you might consider in this situation.
- Hire BMG to Manage It For You – And finally, we will touch on why hiring the right property management company could be a game-changer for you.
Pros and Cons of Renting to College Students
Some investors find the thought of renting to college students intimidating. These individuals have probably never lived on their own before, and owning and renting a property near a university can lead to legitimate concerns. However, a student housing investment can have significant advantages as well.
- Pro: Higher rents – Studies have shown that housing around college campuses pays well. According to Fortune Builders, “Investors with student housing properties may achieve a return on investment (ROI) upwards of ten percent.” In other words, real estate near colleges is often priced favorably for investors.
- Pro: Save money on upgrades – As you might expect, college students don’t tend to be as concerned with certain things compared to other types of renters. They often do not care if the appliances are not the most modern or the carpet is 100% stain-free. This can help investors and owners cut costs.
- Con: Limited credit or rental history – On the other hand, college students are more likely to have a limited history of renting. This comes with inherent risks, which is something to consider.
- Con: Frequent turnover – Another drawback to renting to college students is frequent turnover. You’ll be lucky to have students stay for a couple of years. Overall, they tend not to stay as long on average compared to other types of tenants.
- Con: Property damage – While wear and tear will happen in any property, the frequent turnover that is common with college students can create additional costs for landlords.
Renting to College Students Lease Agreement Terms to Consider
Renting to College Students Lease Agreement Terms to ConsiderIf you have housing near a college, creating a lease that caters to the tenants you will most likely have makes sense. After all, when renting to college students lease agreements should take into consideration the unique situation that comes with university living. Leases can vary and adding addendums or including certain terms is expected. Here are a few common lease terms that many consider when crafting a lease agreement for housing near college campuses.
Lease End Timing: June or July
If you want to maximize your cash flow and ROI, the ideal is to not have vacancies. When it comes to student tenants, that means timing the beginning and lease agreements when students are likely moving to either move out or move in. The peak rental time is in June and July, so timing things to end and start then is the best for college students. By August, nearly all students will have secured housing.
Get a Co-Signer
Being ready to ask for a co-signer on the lease is common and often crucial when it comes to renting to college students. Lease agreement terms are geared towards wanting a certain amount of assurance that the rent can be paid, and college students often just don’t have the rental history to show evidence of that. Also, most college leases are paid by their parents. By putting parents and students on the lease agreement together, both are responsible for the rent and other terms of the contract.
Rent by the Bedroom
College students often pair up with a friend to save money. That means renting a unit with multiple people on the lease. This can cause problems when those friends turn on each other and suddenly have issues with living in the same space. You can prepare for this by setting up a separate lease for each tenant based on the bedroom they will rent. The kitchen, living room, and other similar rooms can be considered common areas with these joint tenants.
Set a Maximum Occupancy
Occasionally college students will sublet their space to friends in order to reduce the rent they pay. It can get a little crazy. This could dramatically increase the wear and tear on your rental unit or cause issues with local occupancy codes. That said, setting a maximum amount of residents that can stay for a specific amount of time, such as a week, is very common in any residential lease.
Set Quiet Hours
Setting clear quiet hours will help to limit problems that come up with college students, such as Friday night parties. Look up to see if your community or town already has specified quiet hours that you can use for lease agreements.
Hire BMG to Manage It For You
Whether you are investing in long-term rentals or you’re opening up the option of renting to college students, professional management can help. Regardless of the type of rental that investors choose, they need to prepare to commit considerable time and effort to making it profitable. Or not! When an owner cannot or does not want to handle the day-to-day operations, relying on an experienced management firm is a great option.
At Bay Property Management Group, we specialize in managing all types of rental properties. Our team provides full-service rental property management in Washington D.C., Baltimore, Boston, Atlanta, Virginia, and elsewhere. So, if you are just starting or looking for ways to maximize your current portfolio, give us a call today!
