BiggerPockets

Rent to College Students: Yes or No?

Monday, November 10

One line from John Belushi’s character in the 1978 movie Animal House sums up the concerns many landlords have when it comes to renting to college students: Food Fight!

While it’s true students can be hard on rental properties, many of the fears that people have are overstated. Sure, students can be demanding renters, but the disadvantages are often outweighed by the fact that college students represent a large pool of potential renters willing to pay top dollar. Consider the story of Steve Miller, a real estate investor who chose to rent college students at the State University of New York at Cobleskill because “student rents are so lucrative”.

So how do you reconcile the potential for increased wear and tear with the promise of higher rents? The big shots on Wall Street call it risk management. I call it common sense.

1. Ask for a guarantee

Forget about running a credit report on college students. Chances are they won’t have much credit history to look at. Instead, get a parent to sign the lease as a so-called guarantor/co-signer and run the credit report on Mom or Dad instead.

2. Collect a larger deposit

Students aren’t inherently bad, but many of them do cause more damage than normal. That’s why many landlords ask for a larger security deposit - one or even two months’ rent - when it comes to college students. But be careful. Some states limit the amount of security deposit you can collect, so be sure you know the rules.

3. Stop by for a visit

Most leases have a provision that allows the landlord or his agent to inspect the rental property during the term of the agreement; however, many landlords don’t take advantage of it. That can be a mistake, especially when it comes to college students. You don’t need to bring the white glove with you, but stopping by on a regular basis will help you spot problems early on, while keeping your tenants honest.

4. Get some help

Though students pay the most rent, they can be a lot of work, think late night parties and calls to the police. Before you have them sign the lease, take a long look in the mirror and ask yourself if you’re up for the challenge. If not, consider getting some help by hiring a local property manager. Though they may charge as much as 10 percent of the rent, they can be worth their weight in gold, especially for those landlords who live out of town.

You can subscribe to this blog by visiting the Buildium Blog.

Comments

1. 

   Joshua Dorkin Reply
   over 3 years ago

   College rentals can be a great way to make money as a landlord, but you're right about the risks that go along with these tenants. Nice post . . . if you don't have the stomach to deal with higher risk tenants like college students, you probably shouldn't. If you do, however, you should be ready to take the proper precautions to ensure your apartments aren't getting destroyed.

2. 

   Michael Monteiro Reply
   over 3 years ago

   Josh,
   Thanks. There are ways to minimize the risks of renting to students. Finding the risk level you are comfortable taking on is critical when choosing to rent to students.

   -Michael Pickett

Post a Comment

Your Name:
Your Email:
	Subscribe to comments?