Pros and Cons of Owning Rentals in College Towns?

Question

Hi everyone! I hope you’re doing well. :)

I have a question that I was hoping to get some community feedback on. I’d love to know from any of you who have rental properties in college towns; what are the pros and cons for being a landlord with college student tenants? What are the vacancy rates, typically?

Are there any major pitfalls or turn-offs that outweigh the potential benefits?

What about subletting?

And do you include any specific details in the lease agreements that you wouldn’t typically include with more permanent tenants?

Any feedback is greatly appreciated!

Account Closed · Answer

Hi Emily,

I have a student rental in a college town 10 minutes from my house. I love student rentals but there certainly are pitfalls.

Pros:

- I have had zero vacancy (100% occupancy) every single year I've owned it.

- Properties rent on a per bedroom rate, typically its higher but I can't speak to all markets

- The student market I'm in signs leases in September for a June 1st move in date. Lots of time to get them rented again

- I have found students to be very respectful and always paying on time. I think that's property and location specific however. I also make an effort to be a resource for their parents if they are in the picture or are paying.

Cons:

- They're typically clueless on easy fixes such as light bulbs, tripped electrical circuits, and they leave windows open with the heat on. You've got baby them with these sorts of things and be prepared to hear from their parents before you even know about the issue. Make procedures very clear from the beginning

- If you inherit a group of partiers, prepare for damage

- Expect annual turnover with new students - if you're paying out leasing fees that gets costly in a hurry

Lastly, there's a landlord association with our college town - see if there's one for you and start going!

James Wise · Answer

• Con = College students get wasted drunk & break stuff.
• Pro = College students & their parents are worried about their future so they pay for said stuff that they broke while wasted drunk.

All & all a good biz.

Emily Cole · Answer

Hi Jonathan! So many great points here! Thank you so much! I’m definitely going to be looking into a local landlord association. 🙂

I’m pretty worried about partiers, like you mentioned, and that’s one of the biggest reasons I’m hesitant on moving forward with college town properties. Is there anything you’ve discovered over the years to help combat this or somehow control this a little? I was thinking maybe a duplex would be best (separation of tenants, less chances for large and destructive parties) but I know that’s not always possible with available properties on the market.

I really appreciate you taking the time to send me your feedback!! 😁

Zachary Trigger · Answer

@Emily Cole

You also need to check into what the normal leasing periods are for the school. Colleges in large city's that students can get summer jobs , tend to do 12 month leases. But colleges that are in small towns with no summer job market or things to do tend to have 9 month leases. So in small towns the rental will be empty for 3 months unless you can find a summer student. This is also important for insurance purposes. Insurance providers do not like empty houses. Every college market is different, so spend the time to learn the quarks of the market.

James Wise · Answer

lol yea i've dealt with a lot of stuff over the years.......................

Tenant smoked a big ole' bowl of chronic & left the house while leaving their smoldering bowl inside of a hanging basket on the porch. Poof!, there goes my house.

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Tenant's got into a dispute over some money. Something dumb, $20 bucks or so. Naturally the move of the slighted party was to set the other dude's car on fire. Lol, it burned up my dumpster enclosure & a 2nd car because the guy didn't know which gold car was the right car.

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When the police come to the house to bust it for drugs they aren't very gentle with the doors!

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I don't even remember how this one happened. Lol, I am sure it was normal wear & tear.

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Sometimes tenants light fireworks off in their bathtubs.....Really freaks the neighbors out.

Dillon Jalbert · Answer

Hey James,

Worst-case-scenario story I heard last year:

Group of college students rented a house, and (not even during a party) cut a hole from the second floor to the first floor and installed a fire pole.

Long story short, the owner had to tear down the house because the structural integrity was compromised.

Obviously that's probably the worst thing that could happen, and I know plenty of other people who rent to students and haven't ever had issues - just something to be cautious about.

Emily Cole · Answer

Hi James! Thank you so much for getting back to me! Parties and drunken students breaking things was definitely a major concern for me. I didn’t consider the other side that the parents/students might want to fix their record and end up paying for the damages. Thank you for that excellent point!

Have you encountered any major damage over the years? IE structural damage or major plumbing/electrical damage?

Account Closed · Answer

@Emily Cole my suggestion is getting the right property. The property I bought is perfectly situated for those who have a car and work in addition to school or are grad students. Essentially stay away from the party area - that area serves a purpose and its landlords who don't keep their properties in good condition and make a lot of money on it.

There are countless students who are very responsible and don't have time for shenanigans. Seek them out with advertising on grad student sites or specific majors etc.. perhaps put fliers in buildings where they have classes. Just be careful to not break Fair Housing Laws, it is important we treat every prospective tenant with the exact same process.

Nicholas Darracq · Answer

Demand is strong in these locations. Make sure you get an appropriate deposit and inspect the property regularly. Make sure you require renters liability insurance with a dollar amount as part of the lease. Make sure your lease also requires that you are to be listed as an additional interest and additional insured on the tenants policy if you need to make a claim. If income or credit are average than certainly have the parents co-sign the lease. Also, our leases have a clause stating subletting is an un-curable breach.

Thomas S. · Answer

If you opt for student rentals never rent to first year students. They party, they have no life skills and a large percentage drop out at the end of first term. Second year or higher, masters or PHD even better. They are serious students. and far higher quality tennats over all.

Pros and Cons of Owning Rentals in College Towns?

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