renting in college towns
Long Beach, CA · Member since 2016 · 3 posts · 1 vote
Hi everyone:
FIrst thank you to all who post and mentor those like myself who are new and ambitious to achieve our financial goals through RI. I was wondering if anyone could provide some insight into college rentals. I am looking into a few properties located near my alma mater (I thought this would be a good place to start as a newbie). I don't necessarly want to take on a huge rehab project as I am inexperienced and live out of state. Any expriences or thoughts are appriciated. thanks in advance, Joy.
I managed a 26 unit building next to a university. You can search my posts for lengthy advice LOL.
If I was looking to buy to rent to college students, here's what I'd look for, after learning for 8 years:
Buy or convert a building to small studio apartments. You won't have to deal with roommates, except BF/GF, or large parties.
Use only month to month agreements. Easier to get rid of problem tenants. If you end up with vacancies over the summer, advertise to summer interns for a higher monthly rate. There is a market for this and they will love you if you are cheaper than the local extended stay hotels. I learned I didn't have to worry about renting off-season. There are always students looking for housing rear-round. Not all students start in the fall. And those looking for housing for winter quarter are thrilled to find you.
Only advertise to grad students, preferably law students. I've heard med students are great, too. See if you can advertise on the law school web or facebook page. Get them in their 1st year, and they will probably stay with you for 3 or 4 years.
Allow them to sublet over summer. I gave them written permission for a long-term guest over summer. Original tenant stays responsible for rent. What they do between them as far as money is their deal. I didn't get involved. If guest causes problems, they and original tenant gets 30 days notice to move (another reason for M2M agreements). This is also how I dealt with BF/GF who move in and out. I gave original tenant written permission to have the BF/GF as long term guest. It makes it easier for them to break up and move the GF/BF out, without the original tenant having to move out because they're both on the lease.
Don't accept parents as co-signers. Verify they are students in good standing and do background/criminal/credit checks, but only put the student on the lease. Co-signers are worthless really. They don't guarantee a problem-free tenant. Sure, you can sue them after the fact. But, you don't want to have to sue someone after you evict your tenant, right? So, just rent to the tenant and let them get money from Mommy. I wanted tenants who were responsible. I don't want to deal with their Mommies. Another reason to have M2M agreements. Just give them notice to move, if they are a problem. Legally, every time you give any kind of notice to your tenant, you also have to give a notice to their co-signer. Then, you're on the phone when Mommy calls and wants to discuss the notice. They take twice the work. Plus, they'll call you and want you to tell them what junior is up to. Trust me, I learned the hard way that co-signers are more work, and no guarantee that a tenant will behave.
I would not buy a large home and rent to a bunch of roommates who are all on the lease. Pain in the butt. Some will move out, some will stay, new ones will move in. They will argue over deposit, rent, and everything in-between and expect you to get involved in their drama. Maybe that sounds like fun to you, but not to me. If I had to buy a large home as a rental, I'd rent it to law or med students, I'd rent out separate rooms, with separate month to month agreements, and hire a cleaning service.
Good luck!
I managed a 26 unit building next to a university. You can search my posts for lengthy advice LOL.
If I was looking to buy to rent to college students, here's what I'd look for, after learning for 8 years:
Buy or convert a building to small studio apartments. You won't have to deal with roommates, except BF/GF, or large parties.
Use only month to month agreements. Easier to get rid of problem tenants. If you end up with vacancies over the summer, advertise to summer interns for a higher monthly rate. There is a market for this and they will love you if you are cheaper than the local extended stay hotels. I learned I didn't have to worry about renting off-season. There are always students looking for housing rear-round. Not all students start in the fall. And those looking for housing for winter quarter are thrilled to find you.
Only advertise to grad students, preferably law students. I've heard med students are great, too. See if you can advertise on the law school web or facebook page. Get them in their 1st year, and they will probably stay with you for 3 or 4 years.
Allow them to sublet over summer. I gave them written permission for a long-term guest over summer. Original tenant stays responsible for rent. What they do between them as far as money is their deal. I didn't get involved. If guest causes problems, they and original tenant gets 30 days notice to move (another reason for M2M agreements). This is also how I dealt with BF/GF who move in and out. I gave original tenant written permission to have the BF/GF as long term guest. It makes it easier for them to break up and move the GF/BF out, without the original tenant having to move out because they're both on the lease.
Don't accept parents as co-signers. Verify they are students in good standing and do background/criminal/credit checks, but only put the student on the lease. Co-signers are worthless really. They don't guarantee a problem-free tenant. Sure, you can sue them after the fact. But, you don't want to have to sue someone after you evict your tenant, right? So, just rent to the tenant and let them get money from Mommy. I wanted tenants who were responsible. I don't want to deal with their Mommies. Another reason to have M2M agreements. Just give them notice to move, if they are a problem. Legally, every time you give any kind of notice to your tenant, you also have to give a notice to their co-signer. Then, you're on the phone when Mommy calls and wants to discuss the notice. They take twice the work. Plus, they'll call you and want you to tell them what junior is up to. Trust me, I learned the hard way that co-signers are more work, and no guarantee that a tenant will behave.
I would not buy a large home and rent to a bunch of roommates who are all on the lease. Pain in the butt. Some will move out, some will stay, new ones will move in. They will argue over deposit, rent, and everything in-between and expect you to get involved in their drama. Maybe that sounds like fun to you, but not to me. If I had to buy a large home as a rental, I'd rent it to law or med students, I'd rent out separate rooms, with separate month to month agreements, and hire a cleaning service.
Good luck!
Thank you, that was very informative. I had thought the opposite about the co-signer, but your argument convinced me that I'd open myself to a can of worms. I also hadn't thought of the benefit subdividing a large house would bring. Would you especially recommend subdividing a larger property (a house) into studio apts. if the water and electric were still on a single meter?
Great advice! Looking to invest in college markets in my area, will definitely keep these things in mind!
I have a couple student rentals, they rent for the year and my PM has the parents co-sign. i so far have not had the problems that @Account Closed has said, although i do think she makes some good points and it is good advice. I've had mine for about 3 years now and think they are a great source of income. some advice i would give is to keep track of local zoning laws on what you are allowed as far as housing and if your property is zoned for it, and also to keep track of what is happening at the university. I stopped buying student rentals there because the college made more dorms ( even though there were reports that they would still count on outside student housing) it hasn't ended up that way, enrollment went down, not up as predicted, and the college went from mandating Freshman to on campus but to Freshman and Sophomores must stay at in campus housing, took a big hit on a lot of student rentals in town.
Thank you, that was very informative. I had thought the opposite about the co-signer, but your argument convinced me that I'd open myself to a can of worms. I also hadn't thought of the benefit subdividing a large house would bring. Would you especially recommend subdividing a larger property (a house) into studio apts. if the water and electric were still on a single meter?
Yes. The building I managed did not have separate meters for anything. Each studio had it's own hot water heater, which is the way to go. Having a central boiler is a pain. The owner had several properties with them, and was slowly switching over to each tenant having their own hot water heater. This way, if they run out of hot water, it's their doing. It's easier to tell a tenant that they are in control of their hot water, and you can adjust the temp higher, or show them how to do it, if they're running out. Plus, if one goes out, it's not the entire building.
We also had really hard water, and sometimes the deposits would build up in the hot water heater, which would mean less volume inside to heat, causing them to run out of hot water faster. The owner had some way of getting it out. But, it's easy to just replace a hot water heater if necessary.
We also provided a little stove/oven (gas) and there was a gas wall heater, and a fridge. No balcony, first-come, first served small parking lot and street parking. It was old and not fancy, but clean and well-maintained and within walking distance of campus. I had no problem renting them. Students ready to live without roommates aren't that picky, as a rule. You'd get the occasional princess who would turn her nose up and that's when you say a gratitude prayer LOL.
We included everything in rent - water, sewer, garbage, electricity & gas. They were responsible for anything else. The building was wired for both phone (DSL) and cable for TV and internet.
And what you get, are students who prefer not to live with roommates and are willing to pay a little extra for their own space.
I have a couple student rentals, they rent for the year and my PM has the parents co-sign. i so far have not had the problems that @Account Closed has said, although i do think she makes some good points and it is good advice. I've had mine for about 3 years now and think they are a great source of income. some advice i would give is to keep track of local zoning laws on what you are allowed as far as housing and if your property is zoned for it, and also to keep track of what is happening at the university. I stopped buying student rentals there because the college made more dorms ( even though there were reports that they would still count on outside student housing) it hasn't ended up that way, enrollment went down, not up as predicted, and the college went from mandating Freshman to on campus but to Freshman and Sophomores must stay at in campus housing, took a big hit on a lot of student rentals in town.
I'd have been singing hallelujia songs - hey, even if I advertise on Craigslist, I won't get freshmen or sophomores, yay! lol.
The idiots at the college will soon realize that students and/or their parents aren't so stupid as to not realize that mandating sophomores to live on campus, is just a way to pad tuition. I bet they'll back off on that. No doubt, the student enrollment went down because of it.
It's amazing how some highly educated people have absolutely no common sense. Can't you just see the meeting where they were discussing how to increase revenue. "I know! Let's make the sophomores stay on campus, too!" "Hear! Hear!" And the lone voice of reason in the back saying, "Um, what if they don't want to, and decide to transfer somewhere else that doesn't require that?"
But, still, there is no doubt a demand for off-campus housing for juniors and seniors. Are there grad students, too? So, offer the best deal in town - or the best building to live in because it's quiet and managed well, or otherwise gives them what they want. Competition is not a bad thing.
Great information, I just spent two days in Birmingham AL. First time there and saw a lot of revitalization and hospital growth was very similar to some of what I see in Maryland with John Hopkins. Anyone have any feedback on Birmingham as college rental or out of state investing?
Nurses are also great tenants. There's a market for housing for traveling nurses, too. I had a few. The traveling nurse I had, ended up staying. He paid a premium for short rental agreements of just a few months, and he stayed for years.
Very informative information. I am a newbie and decided on college property rentals, you know., just to get my feet wet.
Thanks!
Very informative information. I am a newbie and decided on college property rentals, you know., just to get my feet wet.
Thanks!
Try to target grad students, especially law or med students. See if you can advertise on their bulletin boards or their facebook page, etc. Avoid undergrads, unless you can target international students, as they're serious students and not partiers. You could maybe talk to the international students department and ask about advertising to their students.
What they'll often do, is have someone from their department come look at your units and discuss them with incoming students who are still in Korea, China, etc. The students will speak decent English, too.
Thank you @Account Closed. I am currently researching locations, this is great information. I hope to take action with the next couple of months. I have to get out the distraction called FEAR.
Thank you @Account Closed. I am currently researching locations, this is great information. I hope to take action with the next couple of months. I have to get out the distraction called FEAR.
Fear is healthy. In real estate, this usually means you'll research the heck out of something before losing your life savings. That's a good thing :-)
I wrote an article on the basics a while back you might find useful: https://www.biggerpockets.com/renewsblog/2015/07/29/introduction-student-housing/. Hope that helps!
I work in the student housing industry, you have covered most of the issues other than property damages and International students. I would say at least 25% skip out on leases with damages costing in the thousands. There is nothing you can do either, they pack up and leave the country.
Talk to the local university advisors in those "high level" programs like grad, mba, law, med etc and they'll likely give you great info on when classes start, let you advertise on their bulletin boards and/or webpages. We've had great success filling subleases or vacancies over summer with early-start programs.
Great Post. I have invested in student areas, and have found it to be a good experience. It's not without learning the ins/outs of each local area. There is also a difference (usually) between renting to Sr/Jr vs. So/Fr as indicated in the post. Definitely research on this site, and I would recommend a mentor in your area to help guide you initially. Have fun!
Thank you Jason Ramer, i will most def research.