Buying vacant college rental units after start of school year?

Question

Looking at a vacant 6 unit that is in ideal location for renting to students from the local liberal arts college. In light of the deal not closing until Sept/Oct, I was wondering if anyone had any suggestions how to try and rent it out. Try to find stray college students mid-term? Find miscellaneous tenants through July and then non-renew? Keep vacant and fill with students as able? Curious if anyone has encountered this. Thanks!

Chris Svendsen · Answer

I bought a unit that housed 3 students. It had one occupied, put in contract needed at least 1 more signed lease to close and I could market while waiting to close for a 3rd.  By time I closed had 3 students.  2 years later no students as area I am in market changed drastically and now more commuters going to the school and a massive complex got built right next to school.  Now rented to a family. Might ask yourself why empty so close to start of school and if can still profit if can't get students in it. Other than that advertise and make it nice.  Mom and dad love spending money on a nice place, not so much on a less than nice place.  They want to make sure the kids have a good place to live.

Dave Poeppelmeier · Answer

@Andy Brown Ah yes, the poor timing of a great student rental property! I've been in this spot before as well, and I made the mistake of renting it out to someone just to get it rented. It was so bad I sold the house instead of dealing with her and the damage her family did to the house. If your goal is renting to students, then rent to students. There's an outside chance that you might get someone for the Spring Semester, but I wouldn't count on it.

Like @Chris Svendsen said, first and foremost make sure you can actually rent to students. Every school is different regarding city regulations, University regulations (sometimes students are required to stay on campus for X years, you have to get approval from the school to rent to their students, etc), and the student housing culture of the area. When do students look at houses for the next school year? How much is a nice rental vs a lousy one? Do they rent for 9 months or the full year?

Otherwise, as long as you can handle the holding costs, this would be a great time to update the units. As Chris said, parents like nice units, and students will treat them much better than if you give them a bombed out party pad. If you don't want the higher rents (and higher time required for management), then just treat it as a typical rental and do your needed repairs and rent it out to normal people. Good luck!

Chris Svendsen · Answer

Oh and make sure local zoning allows you to rent to students if not approved for them already.  Some towns do not like student housing in areas and not always easy to get approved.

Andy Brown · Answer

@Dave Poeppelmeier

Thanks, Dave. I'm not entirely committed to the student rental option for this property (or the property for that matter) but this is helpful advice as I'm considering some others that could fall into the same category.

Do you typically charge per student or per unit?

Brett G. · Answer

@Andy Brown

My vote is to rent to other tenants until the next cycle of students will start.  Make sure your tenants are aware that you do not plan to renew their lease.  This will at least get you some dollars coming in in the meantime.

Dave Poeppelmeier · Answer

@Andy Brown you want to keep everyone on one lease. That way they keep each other accountable regarding paying rent, not damaging the house, etc

Will Gaston · Answer

@Andy Brown I'm not sure what it's like in your market but in mine it would unfortunately be vacant until the next summer. Timing is incredibly crucial in my experience with student rentals. Mess it up and you'll have vacant property for a year...ask me how I know!

This thread may be helpful:

Nearing 1,000 College Students: Here's What I've Learned

Andy Brown · Answer

@Will Gaston

Thanks, Will. That's a great post and I appreciate you pointing me to it. Sounds like a good niche if you go in with your eyes open. Do you self manage?

Will Gaston · Answer

@Andy Brown Sort of. I usually have about 70-80 units total so I have enough revenue to hire an in-house manager. She manages all of my property and I like that better because I got full attention to it as opposed to some attention with a large PM firm.

Andy Brown · Answer

@Brett G.

Thanks, Brett. Wondering if a hybrid approach could work. Rent 3 in regular leases, keep 3 vacant. Phase out the original 3 in time. But we'll see.

Buying vacant college rental units after start of school year?

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