Renting to college kids?

Question

Thinking about buying a duplex with 7 bedrooms and 4 bathrooms in a small college town and rent to college students to get started in my real estate investing career. What advice would you give a beginner?

Will Gaston · Answer

@Matt Pojanowski lots of great advice on here from @Tim Simmons @Mary Mitchell @Peter T.

The absolute very first thing I would do is contact the Zoning and get confirmation on how many unrelated persons you can rent to. In many college towns there is a max. The limit in mine is 3 per unit so if I had a 7 BR duplex I could only rent to 6. That can obviously have a huge impact on cash flow.

The second thing I would do is find a seasoned student rental landlord in your market. There are usually a handful in each market that know just about everything about zoning, leases, timing, ordinances, etc and have been doing it for many years. This is a hack that could save you enormous headaches in the near term.

I currently rent to ~130 students and have been renting to this market for 13 years. I shudder to think what it would be like to buy a property with all the things I know now unless I had the help of someone who knew what they were doing.

Tim S. · Answer

There is a good argument to be made to NOT have the parents co-sign. Parents can often be more hassle than the kids. If they are not on the lease you don’t have to talk to them. I’m an advocate of this approach

Our lease specifies we are allowed to do inspections twice a year.

Matt Pojanowski · Answer

@Will Gaston @James Gleeson Thank you both for the advice! I have a friend in the same town that owns 2 duplexes. I will talk with him and find one or two others to talk with!

Peter Tverdov · Answer

Rule with an iron fist and you won't have a problem. Do monthly or quarterly cleaning inspections (which includes checking smoke/carbon and fire extinguishers). Co-signers...if it's a large group no. If it's a small group, yes. Have provisions in your Lease like no going on the roof, cannot shut off the heat, no parking on the front lawn, etc.

Mary M. · Answer

I rent to students in off campus housing. They are just like anyone else. Sometimes they have never rented before so you might need to help them a bit with knowing what needs to be done, but other than that they can be great tenants. I have parents co sign in certain circumstances, but if they have stipends to pay for housing i use that for source of income.

I treat students like anyone else. And they use their units just the same as everyone else. So i dont get larger deposits.

Its a great source of folks needing housing.

Shiva Bhaskar · Answer

Have not done this type of rental yet BUT my college buddy's wife's family owns a couple of decent sized apartment complexes in  Maryland, which are focused on off-campus university housing for students. Probably a total of over 80 doors. She is quite involved in the business herself, and we actually discussed at length a while ago when we all hung out.

One tip she shared was to try to get parents to cosign on the lease. In a legal sense, this won't mean a whole lot (you aren't likely to go sue over a bit of damage), but it does get some "skin in the game." Also, you may want to put in the lease (or maybe state law requires it), that you (or your handyman), will be checking the smoke detector at some point in the lease, let's say 4 or 5 months in.

This gives you a chance to (legally) enter the unit, for that task, but also to make sure that things are being maintained properly. If you want, you could even put in that you require an inspection as part of lease, but since you may get push back from tenants on that (I don't know your market and how this works), the smoke detector is easiest approach.

You could try asking for 1.5 months or 2 months security - in most areas, this can lead to longer vacancy time, but you do have more peace of mind, and maybe your market's demand is such that it won't be an issue.

In general, I think with student housing, you'll have to assume that some amount of renovations will be required after move out (which is why you probably want to choose cheaper flooring and appliances). Other than that, it sounds like a good opportunity - occupancy is almost guaranteed with student housing!

James G. · Answer

Make sure you have  a clause that allows you to do at least 1-2 annual inspections. College students can be messy and you want to make sure they aren't doing anything to your property. Students are great because sometimes the next tenant will be their friend... Just make sure you rent to the correct students in the first place!

Shawn Mcenteer · Answer

I had college students for my rental last year.  I did year and half deposit because that is the max my state allows. I made sure to have parents co-sign.  The largest hassle I had was with turnover, tenants were good with allowing people to see unit they just were messy so it wasn't the most appealing unit they moved out, I ironically found new tenants right after a deep clean.

Renting to college kids?

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