I'm considering buying a rental property in Pacific or Mission Beach area to rent out to international students.
Would you recommend this?
I know that there can be a lot of trouble. What are your main challenges as landlords?
I know that international students has trouble finding reliable and trustworthy landlords so I was thinking about housing international students. What are the pros and cons when dealing with international students?
Why such a specific demographic? My fear with international students is that they'll take off and return to their home country without paying rent. Also, they don't have credit history, social security, etc. Why risk it when there are plenty of other tenants out there.
@Chris Frydenlund why PB or MB, the two biggest party towns in San Diego? I'd look for a property closer to the college you think the students will be attending and avoid the party scene.
I know some landlords who are able to push up rent-to-price ratio using a rent-by-the-room model with international students. I don't know if they're able to get to the point of actually generating cashflow, but it definitely brings in more rent that renting out a building as a whole. Reputation matters. The next round of students will be able to contact the previous round of students from the same country very easily.
What country of origin are you targeting? You want to familiarize yourself with customs from any target demographic you're interested in working with to prevent cultural faux pas.
Things to consider:
- You will be exposing yourself to systemic risk within the education industry. Some people think there's an education bubble burst on the horizon.
- You will be exposing yourself to political risk. Say you focus on renting to Chinese students and US-China relationships deteriorate.
- Your turnover will likely be pretty high.
Pacific Beach has a very low vacancy rate and is really easy to rent to anybody. Rents have gone up 20% in the last year. I've been a landlord in PB for 10 years and I love it here.
+1 to what @Frank Jiang said.
When you say "international students" are you thinking of (for example) students going to San Diego State for 4 years? Or, are you thinking of students here for a semester exchange? Or students who are really just here to have fun and only technically attend classes? BIG difference.
I do have 4 family members who have come to the US in order to get a 4 year or graduate degree. From what I've seen of them and their friends, I would consider that to be a potentially profitable niche - they had a very hard time finding rental housing, had financial support to pay above market, and were motivated not to get in trouble. They also network very well with other international students - a reputation for good housing will keep demand high for you. That's a pretty good story from your business perspective.
The biggest downside is that they were also very high touch. They had to be taught how to pay electric bills. Language barriers meant they needed help with dealing with other people - especially on the phone. Cultural differences involving, for example, garbage disposals caused some problems.
On top of that, watch out for drama amongst roommates. That's a problem any time you've got unrelated people cohabiting, but my educated guess is it's more of a problem with folks who are here temporarily and have limited housing options.
Hard to generalize, of course ... YMWV.
Hello @chrisfrydenland I have seen many people I personally know rent out rooms to international students in Mira Mesa as it is right next to the Alliant international university. Hosting college students as a family, receiving what seemed insane cash-flow (1200-1400 a shared room), but also providing everything including cooked meals, furnishings, etc..
With that being said that cash flow will barely cover the mortgage in PB or MB you can guarantee you will have to watch these college age students for abruptly leaving, and damaging your property.
The risks being you will be basically provide an expensive dorm to tenants that will be difficult or impossible to qualify, you want to make sure you can cover the mortgage for vacancies, maintenance, and management.
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