Has anyone rented to George Mason University students?

Question

Hi BiggerPockets people! I was wondering if anyone on here has had any experience renting to college students in the Northern Virginia area. George Mason University is where I graduated from and I have lived in Fairfax for my whole life so I have a good feel for the Fairfax City area.

College student renters can be a very good niche if you have a solid property management and tenant screening process so if you have any experiences (good or bad) I would really appreciate hearing about managing rentals in college towns in VA like Blacksburg, Harrisonburg, Lynchburg, and to a lesser extent Richmond and Norfolk. It would be greatly appreciated!

Jeremy Hart · Answer

Short of condos, which took the hit 2010 (bottom of our market, rather than 2008), virtually every other sector in Blacksburg has recovered nicely. Condos are selling again, thanks in large part to financing rules opening up, but not at the rate that they were. Townhomes and single-family are doing fine. Our biggest problem, at least in Blacksburg, is getting things to cash flow. With median sales prices hovering north of $250000, it's difficult to get things that can cash flow without significant down payment. That's proved to be most difficult, honestly, in Blacksburg.

Radford is a different story, and can't quite put my finger on it. The university is making significant capital improvements, but the housing stock is still languishing, and the last 12 months we've seen rentals actually sitting vacant, which has been unusual. There are good deals to be had, but the number of vacancies is concerning. ~ 9900 students at the university, with somewhere around 65% of those living off-campus. So there's been a lot of downward pressure on sales prices in Radford, and that's not expected to recover anytime soon. It's a long-range play.

I'm still bullish on rentals in college towns, but I'm shifting focus to get away from the college undergrad, and focusing on SFH that caters to a broader rental subset.

Antonio Nguyen · Answer

Hey Hari,

I live in Fairfax right of Braddock Rd near Mason and grew up in here my whole life.  Good to see a local fellow Bp'er.  I work with an investor who strickly focuses on the TH's in the GMU area and rents out to students only.  Although our area is more of a mortgage paydown play, renting out to students is def a strong play.

Hari Mann · Answer

That's really interesting about Radford, @Jeremy Hart. Could the university be making improvements to student housing or adding dorm buildings? I know that around the year I graduated (2014), George Mason University  went from majority off-campus to majority on-campus student body and the years prior to that, the university did a ton of new dorm construction.

Or could the price be declining due to other economic factors at play near Radford?

Levi T. · Answer

I own a few apartment buildings around colleges in the region. Anywhere a University is, it's normally a good area to own. Your building needs to be walking distance, 1-3 blocks, after that it's not really a college area anymore. It's very seasonal for college students, once school starts it's much harder to find tenants, so you fallback to working class tenants, and normally lower rents because of that. Credit scores and co-signers is part of the business, if you push higher scores you wont have much problems.

As others pointed out, high turnover. They will always move in 1-2 years, if not want to break their lease in 6-8 months, and be happy to pay 2k+ to do it. If your good with the higher turnover cost, including repairs, it's a good business.

Kevin Hunter · Answer

@Hari Mann, although not in NOVA, I have rented to college students and here are my two cents.....Good:  steady pool of applicants, Competitive rents.  Bad:  high turnover rates, young, immature tenants with low or no income, rent caps.

I think the good can outweigh the bad ultimately, as long as you buy it right.  If you are going to use a property management company they are going to charge you 10% plus or minus a couple of percent, and they will likely charge you are new-lease fee, likely 1/2 a months rent.  Because the turnover is pretty close to annually, that gets expensive.  These are things you need to factor into your purchase price.

One thing to combat @Jeremy Hart point about tenants failing out or stopping payments is to require a parent as a cosignatory.  This has been very successful for me in past.  Parents have actually told it makes them feel good because they are able to subtlety keep an eye on their kids.

Good luck.  Let me know how it goes.

Hari Mann · Answer

Thanks for the reply @Jeremy Hart! What kind of property were you renting out?

Also I'm very curious to learn about the temperature of the real estate market in these college towns. I see you are a broker as well so do you have any thoughts on how the market has behaved for the past few years in Blacksburg/Radford?

Has anyone rented to George Mason University students?

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