How to get into Student Housing

Question

Hi BP family,

I have a few SF properties and a multifamily under my belt but still consider myself a newbie.  I've been doing some research and found out about Student housing and it really caught my eye.  I wanted get your opinion on do's and don't's and just what to watch out for.

Thank you for your feedback.

Jeff Watson · Answer

I would also add:- Know the schools schedule. When does school start, when do semesters end. Some areas you can get away with a 12 month lease. In my area no one sticks around for summer semester or wants to. We do a 9 month lease but increase our rents to cover those empty months. Kids will pay a little more to not feel stuck.- Make the place "Cool" to live at. A flat screen TV on the wall will cost you $500 but it will drastically increase rent ability.- Make your houses "female friendly" ya know what i mean.... ;) they are just less rough on stuff (other than drains)- SFH is a great way to start. You can convert back to a family if the student market gets slow. Be sure you city doesn't have harsh restrictions on occupancy of "un-related parties)

Andy Basler · Answer

@ Jeff G.   Good info.

A few others:

-Be an active/present landlord. If you don't, the condition of your property will suffer over time.

-Increase your patience/ability to handle "stupid". You'll get alot of crazy questions, request, issues.  I could write a book.

What area?

Anthony Pimentel · Answer

@Jeff G. thanks for your feedback, this is great information.  I agree, and would do the same.  You're right the only way to get close to any university is to pay a premium.  I'm only finding properties about 2 miles away but the numbers still don't work.  I think the only way to get close is to be creative maybe converting abandoned buildings to student housing.  Or develop on empty lots.

Jeff G. · Answer

It caught my eye too. Full disclosure, I have not had any luck actually acquiring any student housing at this point. Where I live, most people who have reasonably desirable houses near a college or university know what they have and don't want to give it up. I'm not saying that to discourage you, on the contrary, you may have better luck.

I've done a lot of research. Here is my game plan going into it, should I ever land a student rental:

A Joint and Several Liability clause in the rental agreement. What this means, in plain English, is if you're renting to 5 tenants and 1 skips out the remaining 4 students are responsible to make up the difference. This will save you no end of headaches.

Parental co-signers on the Lease. Johnny might not care about his credit, but its probable his parents will. If you really run into problems you could recover lost rent through the parents. This is powerful, because what college kid (or recent grad) really has money? Almost none, so going after them financially because they defaulted on rent probably won't help quickly enough to matter to you. Presumably, their parents have deeper pockets.

Make them all get renters insurance. This will give you 10-15 grand per tenant to go after in the event of serious damage to the property due to accident or stupidity on the part of the tenant. As a side effect, this will also protect their stuff if something goes wrong with the place that you're ultimately responsible for like an electrical short or a burst pipe. You can usually work this right into the lease without a problem, talk to a lawyer about specifics.

Make it clear that there is a 12 month lease. Yes, they get the summer off of school (typically) but they're still responsible for the rent. Lots of college students want to cry because "they didn't use it" during the summer. Who cares, you signed a contract, pay the rent.

Location, Location, Location. Try to get within 1/2 mile of the educational institution's student population you're targeting. Why? You can advertise it as "within walking distance" of the university. Remember, college kids are broke and don't want to play for things like gas and car insurance. So, being within walking distance is a huge plus. This has been the very hard part for me, finding something reasonably priced with 1/2 mile of a college or university in decent shape has been hard. I really do wish you good luck.