Student rental process

28 Replies

Hi Everyone, long time lurker, first time poster.  I recently purchased a 6 bedroom/2200 sq ft. house near a small university in our town. The contractor that bought renovated it himself with the thought of putting college kids in there. He needed money on other projects however, so I was able to get it on the cheap. I have only rented to families before, and planned to do so with this house as well. Problem is, families have balked at the house so far (I've even had one lady tell me my house was "too big", and she had 4 kids!! What??). I have however had groups of college kids want to rent since it's so close to campus. I've never done the student rental thing before. All the general applications and leases that I use are designed with SFHs in mind, and are 2 or 3 page leases. I had someone at a recent landlord assoc. meeting show me their kid's student housing lease, and it was 30 pages! I thought about just copying that lease and changing the relevant information.

I guess what I'm really wanting to know is the logistics of all this. How do those of you that have student rentals go about your application/lease process? Do you have one application & lease per student? Do you make the parents co-sign the lease? If so, do they need to be on the app as well (and do you request SSN/copy of driver's license/etc)? Also, where do you get these forms at, or do you just make them yourself? How do you do your payments, do you take a check from each student, or do you request just one rent check for the entire residence? I didn't know how it would work out if you were getting multiple checks and one of the students didn't pay. It would seem easier with receiving just one rent check, and let them collect from each other. How do you handle utilities? Let them apply and pay, or do you do an all-inclusive? My house has city water/sewer, natural gas and electricity. I thought about doing an all-inclusive, but I don't want people to think they can run the heat up to 80 degrees in the winter, and the AC down to 65 in the summer. Not to mention you'd have to provide TV/internet on an all inclusive deal. What happens if they steal the cable modem/TV box? Take it out of the deposit I assume, but those things are expensive. 

Sorry for all the questions, this deal kind of fell in my lap and I felt I had to jump on it. The student rental thing seems far more lucrative than a standard SFH that I could have purchased for the same price. Even a nice 4 bedroom house with a garage might get me 75% of the gross rent that this place could get me. Any advice/suggestions welcome. Thank you!

I think it is an enviable place and glad you grabbed it while it was hot!!  Welcome to the pro-active side of this place!!  [glad you came out of the shadows]

Lots of different ways to do it and none of them is "RIGHT" specifically.  Some say get the parents to co-sign, others say make the students stand on their own ... don't deal w/mommy and daddy.

I've heard some places want all checks to arrive at one time together.  Actually there is a perk here on BP for a Pay App that lets you assign each of the students an amount and a code and they can go to any 7-11 and for about $4 per transaction they can use cash to pay you and you are alerted right away.  I"m not sure what the charge to you is.

Most of these colleges can afford $550-700 or so in rent per room - especially if it is in very close proximity.  I have just put an offer in on the same type of house [only it will still need work done] at the university up the road.  I'm debating between making the lease one year minus two weeks and charge them a little less that month - so that I can get it cleaned and fi anything that needs it... OR going month to month which makes it easier to evict.  I look forward to hearing what others tell you as well!

Check with the local codes on renting to students before you buy the house. Some cities do not allow having more than two tenants with different last names. This happens in college towns frequently. If you decide to rent to individual students number the rooms they are renting. If you have to take legal action to evict, the judge is going to want to know which room you are evicting. The utilities, that can be transferred, should be in their names. College kids could not careless about saving energy. Have the parents co-sign, students don't always pay on time. It is a high turnover rental but it is pretty profitable. Some students want 9 months rent, I never offered it. Hire someone to cut the grass and clean the house. This makes the city and the parents happy. Of course charge the tenants for the cost. Post emergency phone numbers, provide fire extinguishers, check the batteries in the smoke alarms frequently (they are the first to go) and get a good insurance guy/policy. Make friends with the neighbors to keep an eye on the property and to call you not the authorities. There will be parties...

Hi there and welcome to BP,

You will have to check to check the local codes first- I invest in a college town and they do not allow more than 3 unrelated adults to reside together unless you have different zoning.  

I put all tenants on the same lease (about 14 pages long) and they are "joint and severely liable" meaning that if one flakes the rest are responsible.

If the students don't make 3x the monthly rent in income together (they might, many of mine are able to) then ask for a personal guarantor- I use one parent willing to be on the hook if the kids don't pay or damage the place.  They fill out an application and you run a background check on them too.

If I were renting a whole house to the same group, the tenants would be responsible for all utilities.  Most utility companies have a "landlord policy" where you would be notified if they stopped paying, and the bill get sent to you when they take the account out of their names when they are moving.

I allow them to pay separately, and most use Intuit's Payment Network- $.50/ transaction.

Put whatever rules you want in the lease, mine includes clauses about medical marijuana, bed bugs, when to take the trash out, that Drano is ok to use, not to use flushable wipes, that light bulbs within the unit are their responsibility, not to turn the heat down below 50 degrees, not to change locks, no guests for more than 5 days without written permission, the list goes on.  I add clauses to the next round of leases as the need arises, most of these are in an addendum to the actual lease.  

I have not yet needed to supply cable or internet.

@Eric Campbell

If you search here on BP you will find past threads where various approaches to student rentals have been discussed.   I have limited time at the moment, so implore you to search rather than me re-type lots of info here.

With a six bedroom house you need to be concerned about maximum occupancy bylaws and local zoning as others have pointed out.  We have student properties in two different Cities {and are working on a third} and all have some form maximum occupancy aimed specifically at student housing (particularly rooming houses).

If you house is, or easily can be, separated into two units then you have the option of renting individual units on single leases.   If it cannot be separated, then you are left with renting the entire house on a single lease (not always easy with a 6-bedroom) or renting individual rooms {see zoning remarks above}.

We have both 4/5-bedroom houses which we rent by the house and an 8-10 room house in which we rent furnished rooms (predominately to international students).  There is more money in renting by the room, but also more work.   If you decide to rent by the room, I would strongly encourage placing a "Den Mother" in the house - yourself or someone you trust who is a few years older than the students and who keeps the ship upright and on-course ... in our rooming house, my sister-in-law fills that role.

Screening tenants:  Screen your students like any other tenant (credit/background check, etc).

Guarantors: Many/most students will not qualify for a lease on their own, so have them bring a guarantor - usually a parent or grandparent - and screen the guarantor as your did the tenant.  Execute a separate guarantee with each guarantor and include them as schedules to the lease.  I would strongly recommend using guarantees and not have parents co-sign the lease as cosigners have rights of quite enjoyment (access) while guarantors are simply fiscal backstops ... our rule is if you are not living in the house, you are not on the lease (and vice-versa).

Leases:  If you rent the entire house, the tenants on lease are all jointly and severally responsible for the obligations of the lease.  You can also arrange your lease terms so the tenants are responsible for all utilities.

If you rent by the room, then you have a separate lease with each roomer.  This creates more administration.   Additionally, the folks living in the house all have a relationship with you the landlord, but not with each other ... as such, you will be involved in more housemate drama {see my comment above about having a "Den Mother"}.

... out of time.   Search the past threads, or feel free to shoot me a PM if you have more questions about renting to students.

One check One lease Utilities is tenants name- no to all inclusive Cosigners if tenants do not meet the income requirement Cosigners are screened same way as tenants You've figured most of this out on your own already so you're definitely asking the right questions. Go for it and good luck.
Originally posted by @Max Tanenbaum :
One check

One lease

Utilities is tenants name- no to all inclusive

Cosigners if tenants do not meet the income requirement

Cosigners are screened same way as tenants

You've figured most of this out on your own already so you're definitely asking the right questions. Go for it and good luck.

You guys are going to drive me to actually break down and write a blog <eye roll>.

Though I am north of the 49th, contract law in most of your country (Louisiana being a possible exception) and most of mine (Québec being the exception) has the same roots.  A co-signor (endorser) is a signatory to the contract (lease in this instance) and is entitled to all the rights and subject to all the obligations of the contract ... in other words, they have tenant rights.  A guarantor simply guarantees payment, nothing more.  

You do not want the parents as signatories to the lease and neither do their kids, nor their kids housemates.

Eric,

I myself am a first time poster, but have been reading articles on this sight for years now, and I do have a unique view on your rental problem as I recently lived in a college house (while in college) that I owned, and rented out the other rooms to students.  I now use it as a cash flow positive rental in which I rent out all four bedrooms of the house and the attached in laws quarters.  5 renters and 5 checks can be a nightmare as you soon may find out.  I have experimented with multiple types of leases, restrictions and screening methods, some with success others a waste of time.  Most of the info in the above mentioned replies is great stuff, if I could add my two cents it would be that I found a great tenant who was yearning for some responsibility, had a full time job, and in this case is an aspiring real estate investor, and I made him the property manager of sorts.  He would collect rents and issue me one large check, keep the house in order, make minor repairs and bill me, overall he just kept the place organized and in line.  I obviously handled all the new tenant stuff like posting for-rent adds and screening tenants, but he was always involved with the process because I want him to have input on who he will be living with.  This allowed me to have a sort of eyes and ears at the house while obviously not being there. 

In return, I give him a 100 dollar a month discount on his rent and he gets the opportunity to learn about real estate investing and property management. I have been doing this for about a year and half now and it has worked out extremely well.  Of course this is not for everyone and finding the right person may take some time/trial and error but in the tumultuous world that is college rental houses it at least as provided some amount of reliability and consistency.

@Nathaniel Boyer

You have just reinforced the recommendation for a Den Mother when you have a {student} rooming house .... it is akin to having a proctor or don in a university residence.

Good info everyone. Thanks!

I now have 2 sets of applications I'm considering. The first to see the place was a group of 4 guys, who are juniors. The 2nd group is a group of 3 girls, all grad students. Although the male undergrads were the first to see the place, the female grad students got their applications in first. However, the guys agreed to the full rental price, where the grad students would like to lower the price since they have their own washer/dryer and would like to do the yardwork. Decisions, decisions...

Originally posted by @Eric Campbell :

Good info everyone. Thanks!

... where the grad students would like to lower the price since they have their own washer/dryer and would like to do the yardwork. Decisions, decisions...

Been there ... they may do the yard work ... for a while.   We use to give tenants the option of shovelling their own driveway and taking care of the lawn - experience has taught us it is not going to happen consistently or, eventually, at all.  We now bake snow removal and yard work into the rent and do not give a choice.

@Roy N.

Do they question the amount of rent they are paying given the fact that you have "baked" {I like that} the maintenance into the rent?

If the surrounding area rent was ~$1200 and your monthly maintenance was $100 they are paying a straight fee of $1300. While there may be other surrounding rentals that are just at $1200 without/with maintenance.

@Roy N. my co-signers do not have occupancy rights. I specifically outline that in the contract. They have a separate section explaining their rights and responsibilities.

Make sure that is clearly outlined in your lease if you are going to use the word co-signer. Make sure it is clear that they are responsible for all rents/fees, but do not have right of residency/occupancy. They are simply there to help their kid meet your minimum income requirement.

Hello @Eric Campbell

March of this year I finished rehabbing a house that is both close to a very large high paying White collar type of employer and also our local University.  

Had some interest from employees moving to town for the local employer however none wanted to pay the rent I was asking - we didnt have a yard in at the time and the driveway will need to be replaced, however that will happen in the next year or so (driveway is not horrible - just not appealing to the eye) -- however the interior was extremely nice.

Had interest from 3 groups of college students - ended up going with 4 female student athletes -- Ran background/credit checks on them all, naturally none of their incomes supported the rent, however each had to compose an email with the supporting documentation on how  they would afford the rent -- parents emails were included as well (Combo of scholarships, student loans, jobs, parental support etc) -- I had my lease amended by an attorney to be air tight on the joint/several liability that was discussed earlier.  I only accept online payments - include the lawn service and snow removal at my discretion on the driveway.  

I've come to the conclusion that the type of rentals I'd like to maintain - most will not take care of the yard properly so I build the lawn care cost into the rent -- I may end up paying for some of it - however including that is a big selling point to many people.  I'd rather give up a tiny bit of cash flow to have the most qualified tenant(s) in place.

House is a 4 bdrm 3 bath around 2500-3k finished sq feet - dont remember exactly - but sounds possibly similar to yours.

So far so good - all the girls were members of the same sports team and on scholarship -- they stayed in the student dorms the first year of school and state they'd like to stay for 3 years in our house.  We shall see if they stay that long - but do have a year lease in place.

I did throw in a washer/dryer - only cost $400 for a used set as that helped seal the deal on the lease.  

I also cover all utilities and have a separate flat rate utilities charge so they can budget their money easier.  Have it built in to the lease that if it exceeds what I charge them on a monthly basis they would be responsible for the overage -- Charge an additional $375 for gas/water/trash/electric -- I will only provide a rebate if the utilities are less than $325 per mo.

So far so good -- the only mistake I may have made is not having the parents sign as guarantors, hope it doesnt bite me in the butt, however based on all of the information I was provided I was satisfied everything would be paid and on time - so far it has and I spend quite a bit of time trying to analyze someones character on the phone, in person meetings, following directions etc...they passed all of the tests.

Monthly rent is $1495  (actually $1545, however to force online payments - a $50/mo online payment discount is applied so they feel they are getting a "deal" by paying online)

Deposit was $1795 which they are paying installments - They have 2 more installments left.

Then utilities charge of $375 per mo.  Include Lawn/basic snow removal.

You might also try to tailor your advertising to see if you could attract some younger professionals as well...not sure if that would be a viable option where you're at.  I honestly wasnt even planning on renting to college students, however when advertising the house, thats where I attracted quite a bit of interest.  $1495 is a higher end rental in our area - so it was a bit of new niche I was diving into -- had always stayed mid tier before in the $800-$1k range before.

Not sure if any of this helps - but I'd definitely pay a local real estate atty a couple hundred or whatever their fee is to make sure your lease is airtight and when including the joint/several terminology -- make sure to emphasize quite often - either all of the rent is paid or its considered late by everyone and eviction proceedings could/would start on everyone, not just the person who did not pay their share.

Originally posted by @Max Tanenbaum :

@Roy N. my co-signers do not have occupancy rights. I specifically outline that in the contract. They have a separate section explaining their rights and responsibilities.

Make sure that is clearly outlined in your lease if you are going to use the word co-signer. Make sure it is clear that they are responsible for all rents/fees, but do not have right of residency/occupancy. They are simply there to help their kid meet your minimum income requirement.

I would then challenge you should be using "guarantors" and not co-signers (which is commonly used to mean endorser)  which, by default have rights of access.   It would be much easier to simply have a financial guarantee then defend having two classes of tenant - one w/o right of access. 

No legal advise ... but I would have run both concepts past my attorney and accountant and see which is simpler.    We did that here and guarantor was the verdict.

Originally posted by @Daria B. :

@Roy N.

Do they question the amount of rent they are paying given the fact that you have "baked" {I like that} the maintenance into the rent?

If the surrounding area rent was ~$1200 and your monthly maintenance was $100 they are paying a straight fee of $1300. While there may be other surrounding rentals that are just at $1200 without/with maintenance.

You still must be competitively priced in your market place.  If $1200 is the median, but does not include snow removal (big deal up here) or yard maintenance, you would have little trouble charging 1250 - 1300 with the services included

@Eric Campbell

How many bathrooms is the house?  You mentioned 6 bedroom - what kind of shape is it in, upgrades etc?   Have any photos -- I've got a couple other ideas if you can furnish that info if you really want to go after the college market.

Originally posted by @Shane H. :

@Eric Campbell

How many bathrooms is the house?  You mentioned 6 bedroom - what kind of shape is it in, upgrades etc?   Have any photos -- I've got a couple other ideas if you can furnish that info if you really want to go after the college market.

 It's got 2 baths, one on each floor. Old house, but renovated just a few months ago. Here are some pics from the Zillow posting:

http://www.zillow.com/homedetails/349-9th-Avenue-Dr-NE-Hickory-NC-28601/82175973_zpid/

@Eric Campbell

Looks pretty nice -- have you called the utility companies to price out how much the averages are?  Or would there be any pertinent history?

If you wanted to go after college students - I'd think I wouldnt want anymore than 4, maybe 5 people in the same house.  I'd probably throw out a deal of they pay one price and include the utilities...

Ie 4 people - Advertise it at $495 or 545, 595 (whatever you think the market can bear) pp -- however total rent would be $1980 @ the 495 example-- get an air tight lease and emphasize how joint/several liability works and then throw in lawn service (they probably wouldnt mow routinely anyways - will help keep the property looking nicer) -- and build something into the lease that if the utilities exceed a certain amount per month there will be an overage charge.

Pay for electric, gas, water, lawn service and offer a washer dryer (let them buy internet/tv) - if you find a good local mom/pop shop you should be able to get used or rebuilt ones for $400 or less for a set.  Washer/dryer will be a big selling point to the college students.

I'd also change up the ad and show more of the bedrooms - maybe advertise as 4 bdrm 2 bath with an office and bonus room or something like that.  I doubt many people are excited about having a 6 bdrm house -- just a thought.  I'd even mention in the ad you could throw in rental (or include it as a sweetener to land the right tenant) office equipment - find a good quality used desk or cubicle on craigslist and set up one of the rooms as a nice office/study area.   I dont know what is usual and customary for your local market, so obviously you'd need to do your homework to see what will fly and what would get someone excited - however those are some thoughts if you feel the revenue would be higher renting to college students.  Id think selling the rent to them as inclusive of the utilities would be a big selling point.

I didnt see any blinds either -- (have you installed them since the photos were taken?)

Wouldnt be much of an investment (400-500) on blinds.com to get custom fit blinds.  At a minimum for the bedrooms and bathrooms.

I wouldnt trust tenants installing window treatments.  If you have females viewing the property, this is something they are going to notice.

I'm going to install mini blinds I think. No history on the utilities over time, since the house was recently renovated and new insulation was added to the crawlspace and attic. Plus new HVAC and water heater. We just put in a washer and dryer this weekend.

For your student payments, do you accept one check for the entire house, or do you take payment from each student? I'd rather have it on one check, but I could see where that might be a problem with several students from different parts of the country. I have the ability to use ACH Debit to charge a checking account, I'm hoping they'll sign up for that to make everything easy.

Originally posted by @Eric Campbell :

For your student payments, do you accept one check for the entire house, or do you take payment from each student? I'd rather have it on one check, but I could see where that might be a problem with several students from different parts of the country. I have the ability to use ACH Debit to charge a checking account, I'm hoping they'll sign up for that to make everything easy.

Eric:

You have one lease, the expectation is one-payment ... we also encourage electronic payment.  

We often get students each wanting to pay their share directly, we encourage them to select one of their housemates to be the collector and remitter of rent as it saves us chasing 4-5 payments.   If they insist on being able to pay their share individually, we never say no, but tell them it will cost and extra $25.00/mth to have the bookkeeper deal with 5-payments rather than 1.

Just an update, we got 4 students in there and met all the parents as the kids were moving their things in. All seem to be good people, and I think all of them are very well off, given how expensive this private school is. I think I have charged too little however ($1400/mo total), so that will be remedied when the next group moves in. Thinking $450-500 per student. It costs the students over $10k per year to live on campus. My place is a bargain by comparison.

I did end up having to install a dryer vent, as the house didn't have one routed to the outside (didn't even notice this when I bought the place). Small expense. I ended up putting walmart vinyl mini blinds on the windows at $3.77 each. I think I had 21 or 22 windows! Thinking about installing a metal bike rack that's cemented into the ground at the rear of the house, and putting up a fence between the house and the apartment building next door.

@Eric Campbell Congrats on getting it rented!  I deal with a lot of students since I'm so close to NC State university.  I always put everyone on one lease so they are all responsible if one person doesn't pay.  I have the ability for everyone to pay online, so they can each pay their share separately, but before that, I would make them all get their money together and have one person write me a check.  Separate checks was just. too. much...

Thanks Dawn! The students I have now are juniors, so they want to stay for 2 years. I wanted to do electronic payments, but the parents preferred a check. I might just make it a requirement next time. Hoping to get 5 students at $400 a pop next time as well. There's actually several apartment complexes for sale near the same University. I would love to be able to get in on these and turn them into student rentals as well, but alas, I'm running low on capital/down payment.

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