Investor · Markham, Ontario · Member since 2016 · 2 posts · 0 votes
I just recently bought a duplex in London, Ontario, 10 minutes away from school. I am working on the lease agreement now and wondering if it would be more beneficial to have all the students on a single lease agreement, or have separate lease agreements with each student requiring a co-signer.
Is there any way to get best of both worlds? I don't see how a parent would co-sign for the other students in the lease agreement.
Rental Property Investor · London, Ontario · Member since 2016 · 79 posts · 19 votes
9y
Hey Henry, congrats on the new duplex.
Others can chime in here, but here is my understanding of the pros/cons. You're most likely going to get the best cash flow with a by-the-bedroom lease, along with the benefit of parents co-signing. The main downside is that it could be more work dealing with more management, and possibly more frequent turnover between students. However, you should be able to achieve lower vacancy by the bedroom, since the property will probably never be 100% empty.
You're unlikely to get parents to co-sign on an entire lease that includes other students, but you could always try. Also, with a single lease agreement, you could have the potential to charge for utilities, but students are less likely to rent if it is not all-inclusive.
I'd say go by-the-bedroom. It'd be tough to get the "best of both worlds", since the best of the single-lease-world is charging utilities, and less time spent managing - neither of which are particularly compatible with a student rental property. However - others with experience renting student rentals might have advice to the contrary!
Investor · Tampa, FL · Member since 2015 · 293 posts · 175 votes
9y
Are you going to rent the duplex out by the room? If not, I would put them all occupants on one lease. Treat it like a normal conventional lease, can they qualify with credit/rental history/income etc. If you're not renting by the room then it's not a student property in my opinion. @Henry P.
Rental Property Investor · London, Ontario · Member since 2016 · 79 posts · 19 votes
9y
Hey Henry, congrats on the new duplex.
Others can chime in here, but here is my understanding of the pros/cons. You're most likely going to get the best cash flow with a by-the-bedroom lease, along with the benefit of parents co-signing. The main downside is that it could be more work dealing with more management, and possibly more frequent turnover between students. However, you should be able to achieve lower vacancy by the bedroom, since the property will probably never be 100% empty.
You're unlikely to get parents to co-sign on an entire lease that includes other students, but you could always try. Also, with a single lease agreement, you could have the potential to charge for utilities, but students are less likely to rent if it is not all-inclusive.
I'd say go by-the-bedroom. It'd be tough to get the "best of both worlds", since the best of the single-lease-world is charging utilities, and less time spent managing - neither of which are particularly compatible with a student rental property. However - others with experience renting student rentals might have advice to the contrary!
I have a related question for you... is that 10 minute walk, or 10 minute drive? If you are a 10 minute drive from a school in London you aren't in student rental territory and you won't be renting by the room with much success. Is there a bus stop at your doorstep?
When I rented while going to UWO I was on an individual lease with cosigner, but all occupants of the house shared the utilities evenly. Perhaps that was a special case because we were friends, and we had a special arrangement with the landlord, but I knew others that did the same.
Investor · Toronto, Ontario · Member since 2014 · 320 posts · 125 votes
9y
@Henry P. - If you're looking to refinance in the future, the less it looks like a student rental, the better. Many lenders these days won't touch student rentals, so a single name on the lease for the property, or at worst, all student names on a single lease, are what my broker suggested for all my student rentals.
Another thing to consider, is having parents co-sign. I spoke with a paralegal about this recently and he was insistent that I should use a separate guarantor schedule instead of having the parents co-sign the lease as it would affect the validity of the lease itself in Ontario. I need to look into this further myself, but if I were you, I'd do some research on that now while you're drafting the leases up.
Investor · St. Thomas, Ontario · Member since 2015 · 692 posts · 312 votes
9y
To @Ming Lim 's point about guarantors, do look into it but I have read that it is best to have all renters and all guarantors on the lease. This way everyone is liable for the entire lease, there is no sharing of responsibility from YOUR perspective. You just expect a check every month and they are ALL sued if you don't get it. You'll most likely get a group of students who have chosen to live together anyway, so it isn't like you're throwing strangers into the ring with each other.
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
9y
When you rent by the room the drama of how the common areas are maintained and used is your problem. I had one friend who was a slob in the common areas when they showed the other room. that kept the second bedroom empty for quite a while. Not everyone is like that though. Utilities can also be a conflict.