Renting To Students

30 Replies

We're starting to rent to students and want to learn more how to best write and manage the lease among the tenants.

We have a duplex with two, three-bedroom units. We have furnished each room with a bed, dresser, and desk, and can now make more renting to three students. Our dilemma is how to handle the following:

1. How to write up the lease. Is it one lease they all sign or does one person of the three sign and take responsibility?

2. What happens when one wants to leave and the others don't? We typically sublet but fear doing this because now someone might come in that that other two don't know.

3. How do you handle the security deposit and return?

Any help would be appreciated. Thanks.

Do a search of threads on student rentals and you will get lots of info. I recommend one lease to three students who want to rent together unless this is like a boarding house in which case you are renting rooms and use of the common area. Deposit may come in 3 checks but gets returned in one unless I get it in writing that they agree to an equally divided refund of the security deposit. Three students, parent co-signers and one lease, they don't get along and want to sublet it is their issue. Go over at signing that they are jointly renting the place.

Colleen's solution is right on. I'd only add that you need to bring in the parents early on, because you can come to an agreement with the students, but their parents hold the money and can say no. Don't take the property off the market until you get the deposit. Ask me how I know.. :)

I second that about marketing until deposit and would say more then any other rental type it is critical to market until the deposit and signed lease. There is a season to student rentals and you could have a long vacancy if you don't rent during that time.

Thanks Colleen and Theresa. I will do all of these. I've also starting putting beds and desks in each room. It's great for the students and it save a lot of wall damage from moving in and out. Again, thank you both!

@Colleen F.  @Lori Marra  

I would add that you shouldn't totally write off students whose parents can't or won't co-sign (my parent's never did). Many times these students don't have the financial backing of parents but are working their way through college instead. They likely have a financial aid package that will help them pay for rent. Any student with financial aid is usually required to maintain a certain GPA to keep that aid as well.  

Instead, ask to see their financial aid statement. Most colleges create a budget for financial aid that includes housing. Unless you live in an expensive market, off-campus housing is generally less expensive than on-campus housing. However, schools base their finaid budget for students on on-campus housing. This means that students with financial aid are generally receiving more than enough to pay rent. 

I hope this is helpful.

Jaclyn

@Jaclyn B. while I know about financial aid -it is not a given. Lots of kids get it and don't do well. I paid for my own college living at home with loans and watched friends with financial aid screw up and sometimes it was revoked sometimes not. The letter tells you the offer not the amount of the offer they took. And it gives me no one to pursue if they don't pay. To me if the parent doesn't want to cosign for their kid, they don't trust them and therefor I can't trust them. It a student has enough income to cover that is one thing but if financial aid is revoked because you don't do well-- it doesn't pay the rent. So if someone isn't independent financially and their own parent won't co-sign well why would I want to take them on as a tenant? Their parents won't. Just my viewpoint.

@Colleen F.  

I think you're absolutely right. A parent who won't cosign because they don't trust their own kid is definitely a huge red flag. I suspect my own experience as a student colors my opinion. I paid for college myself relying on a combination of income and financial aid. My parents never co-signed for me because they couldn't afford to, not because they didn't want to. 

I got turned down by several landlords who wouldn't sign a lease without a co-signer until I found a great landlord who took the time to understand my situation. I was never late with rent and took really good care of his property.

I guess my main point is that there are many types of students and it's helpful to take in the whole picture when deciding who to rent to.

I accept any parent signing the point is not the parent income. it is their willingness to stand behind their child should they trash the house. I have never had a problem with a willing parent who reported very low income. For a co-signer more often then not what I want is an indication that they have something on the line when the kids get out of line. In fact the only parent who was really hesitant to cosign was the one whose kid eventually had pot plants in the closet and then stopped paying, so I use that as a red flag. Regardless of income when your kids goes to college and lives in the dorm you are responsible for a trashed dorm room or an accident of your child (or another child who trashed their hallway). If you came to me and you could show me your income was paying I might consider. I have set a criteria and stick to it. Teaching assistant or something like that ok but financial aid not part of my criteria. I know their are lots of different kinds of students but only some I am willing to rent to. I get a fair amount of lower income families signing for their kids. URI is the state school in a very small state with high unemployment so I do monthly not semester payments. Thankfully I haven't had to go to the parents for payments, occasionally I have had the help of a parent with student behavior.

@Jaclyn B.

it is all about putting in the best possible person. Just like some w/ parents that wont cosign, there a tenants that will be great that don't make 3 times the rent, have bad credit for whatever reason, or got in trouble with the law that are responsible and can handle things- BUT not knowing any of the people and treating everyone fairly- the less red flags I see, the better the chance I have of finding the right tenant.

I've mentioned this in other threads. What i would suggest when dealing with college students is 2 things to insure that you are as safe as can be is 1) Make sure you have a strict lease. As long as you don't prove to be a complete jerk and the property is nice i don't think they will give you any crap about a stricter lease. 2)Look for kids who have parents in the upper-middle class and who will cosign on the lease. By doing so it adds a pressure to the students to keep the property safe, and if they don't you can leave it up to good old mom and dad.

Don't.

Put all tenants - and parents as co-signors if they don't qualify- on the lease. Then if one roommate chooses to leave, that's not your problem -- it's theirs.

If you choose roommates and rent rooms to strangers, you could have all sorts of issues. Occupancy of unrelated person, for one. Insurance issues. Roommates moving out at the last minute. Other people renting a room from you purposefully being annoying or dirty to try to prevent you from filling the vacant rooms-- then they can live alone and not pay more. People letting girlfriends/boyfriends staying over too often. Liability out the wazoo-- roommates bringing guests over, complete strangers living with each other (alcohol, assault, drugs, etc.). And are you renting to females or males or co-ed? Co-ed means more issues. Renting to, say, all females you'll end up with some females having their boyfriends/girlfriends stay over... annoying other tenants and adding more liability. Roommates breaking each other's things (or your new furniture), stealing from each other, claiming theft/assault/etc. to get out of leases, etc.

Why on earth would YOU want to be responsible for finding roommates who are complete strangers to live together? Then finding more compatible roommates each time someone moves out????

Make it a single family home. Let the college students find their own roommates. Get parents to co-sign for students who don't qualify. So so much easier, so much less hassle of finding people willing to live with complete strangers, so much less roommate drama to deal with, so so much less liability.

When you do one of these homes it needs to be purpose built preferably from some junk house that needs all new everything. Then you can kid proof it in many ways like using plywood under the Sheetrock so they can't put holes in it, making each room furnished including their own refrigerator and each room have a lock and deadbolt.

The floors can be done in acid stained concrete that is nearly indestructible, the garage can be divided into storage lockers and one room for an office so you have reason to be there at any time. Security cameras on the front door sides and back of the home all outside, this protects your property and it could save a kid from trouble if they are blamed for something they didn't do away from the home. It also allows you or their parents to check on the home anytime on a smart phone.

I would provide free cable and wifi, the house would be supplied with a nice but cheap leather couches, you know the thick leather that lasts a long time. Use concrete counters in the kitchen, they are cheap to make, look good when stained and last a long time.

The backyard would get a heavy duty picknick table with a cheap umbrella, some wood beach chairs and a gas BBQ. The yards would be taken care of and a maid service would clean the main part of the house once a week.

There is a strict policy of no overnight guests and no parties in the contracts!

The advantage of collage rentals is you can make twice as much money on the same house! 

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Suggestion from past experience: If possible have parents co-sign for student rentals

Jenkins Ramon, JMWPS Ventures, LLC | [email protected]

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I know an elderly gentleman that has a house with 6 bedrooms and 3 bathrooms. He keeps the master with the master bath and rents out the other rooms to supplement his SSI income. Great ideas that I'll have to pass on, we have a university in town that would probably provide student tenants.

You sound like an old hand at this sort of rental arrangement. Do you make contact with the university's housing department and try to network through them to funnel business your way or do you just post on the usual online listings (craigslist, etc, etc.)?

Thanks to everyone who has helped with this. We will be taking up some of your suggestions and we won't be renting by the room. We're in one of those down cycles right now. Any suggestions on how to market to college kids other than Craigslist and posting signs on campus (we've done both but neither are helping in the off cycle.)

Again, many many thanks.

Lori,

As a former college foreign exchange student I like the advice from some of the others to contact the international department at the local universities and try to work a deal with them on a short term lease for their international students. They typically can have a few different options for their students (homestay/own apartment/group housing) and might be looking for someone to partner with for some short term stays (fall, spring, summer). I have not rented any properties yet, but I think you might be able to find something there if you contact the schools. It might help offset some losses if you are looking for someone in the short term till the regular renting season.

In TX we would do this with one lease, all three tenants signing, and the parents of all three tenants signing as guarantors (co-signers). Your state may be different.

great information here.  I have been exploring the pros/cons of purchasing a multi to possible rent out to students (I live near UT in Austin).  Thanks for everyone's input, indirectly.  :)

Originally posted by @Andrew Jordan :

great information here.  I have been exploring the pros/cons of purchasing a multi to possible rent out to students (I live near UT in Austin).  Thanks for everyone's input, indirectly.  :)

 Hey Andrew, if you want any insights on marketing to students and/or any other questions you might have, I'm happy to help. We have a fair deal of experience in marketing and leasing to students which I can pass along!

We advertise to students at the University of Kansas.  We've had some success posting on Zillow and postlets.com, as well as just putting a sign in the yard.  In fact, I think we usually get more calls from Zillow than Craigslist here.

Seconding what others have said, we make them sign one lease and explain that they are all responsible for the entire rent, not just their 1/3.  Also, we've never furnished the apartments for students.  Is that necessary in your area, @Lori Marra .  I would worry that it is just another thing that will become damaged or that you will have to maintain.  

I'll just add that if you can target grad students - especially med or law students, you will have far fewer problems.  These students are older and their studies are so intense, they are too busy and exhausted to party.  They pretty much just use the rental to sleep and eat.  Law students also have to worry about any potential legal troubles that can possibly be a problem when they try to pass the moral character review with the bar.  I loved law students.  I only rented studios, though, so I am not personally familiar with dealing with renting multiple rooms to different roommates.