Should we Airbnb, rent to college students, or rent to a family?

Question

We are looking at buying our second home and renting the first. We live extremely close to a college in Colorado Springs. One property manager told us the highest cash flow option for us would be to rent to students but I would like to explore the idea of short term rentals. What do you think would be the best option for us?

James Carlson · Answer

@Brian Plesscher

That's an exciting move. Are you close to Colorado College or UCCS? We have a 4br/2ba house in Colorado Springs near Colorado College and get $3,200 for it. We're happy, but I'd definitely do your due diligence when choosing tenants and get all parents to co-sign.

The bigger issue with Airbnb or short-term rentals in Colorado Springs is not how well they'll do -- they do great if you run them well. The biggest issue is the law. Yes, technically, you are allowed to do STRs in non-owner-occupied homes, but ... big but: Only on properties zoned R2 or some other multi-unit zoning and only if it's 500' away from another non-owner occupied Airbnb. When you start drawing those 500-foot bubbles on a map, most of the city is blotted out.

Final note: If you're going to do the college rental thing, I'd stick with renting to one group. If you really want to go the house-hack style, rent-by-the-room model, you can do that and do well, but be sure your lease addresses the issues specific to that model. (Specifically, how to handle shared costs and shared-space damage and also how to handle liability should one of the tenants -- who you chose -- damage the property of another tenant.)

Good luck!

Boris Mordkovich · Answer

One way to look at it is as follows:

1. Least cashflow; lease hassle - rent to a single family2. Medium level of cashflow; a little more hassle - rent it by the bedroom to college students3. More cashflow; same level of hassle as #2 - furnish the rooms, then rent to college students4. Most cashflow; most hassle - furnish it and rent it out as short-term rentals. You’ll make more, but it’ll just take more energy and more of a system to set it up and run efficiently

Paul Sandhu · Answer

Rent it to visiting professors instead of students.  I was a college student once, and I would never rent to someone like myself and the people I associated with.  One of my associates drove his motorcycle through a sliding glass door of his residence.  Another associate shot holes in his walls with a revolver.  Another associate came running up the stairs from the basement with a keg of beer and collided with a 55 gallon fish tank.

Steven Foster Wilson · Answer

- Depends.

-Is it a 3 bedroom+ rent to students

- 1-2 bedroom airbnb that stuff

- families are poor, don't rent to them.

My duplex on OSU campus is a total of 8 bedrooms and rents for $4,500.

Robert Saunders · Answer

You might consider renting to parents who need a place to stay on move-in/out day or big game day. We provided summer and study abroad storage and shipping and the amount of parents looking for a place to stay near campus after moving their student is huge! Parents are often overlooked when it comes to needing a place to stay after a long day of traffic, schlepping boxes, moving and un/packing. Rooms can be made available to parents the week before finals, the week of finals, and the week after finals. Don’t forget some may need accommodations for summer sessions. It’s high stress time for students. You might also consider medical Schools. Students attending these campuses move around a lot and need accommodations. The collegiate market is wide open on catering accommodations. Connect with housing offices that are open to helping you market your off-campus accommodations. After you’ve gotten established in your business consider building relationships with international offices and consider attending a conference for housing directors. It’s called ACUHOi (Association of College University Housing Officers International). They have conferences all over the U.S. in different regions. Check them out!

P.S. Connect with alumni and parent clubs to get well networked and be the go to person for a place to stay near campus. Network with other property owners when you don’t have a accommodations. You never know when you’ll need them and vice cersa.

Ryan Riches · Answer

I have done a few STRs in Colorado Springs and found the market is pretty localized and cyclical. The farther you are from the city center, the less you will be able to charge nightly. Additionally, there are not a lot of people traveling to COS from November to April. Expect to get much less for your nightly rates and experience higher vacancies.

Depending on your financial situation - if you are planning on claiming the income from the property to help you qualify for the new one, many lenders will not allow you to claim STR revenue as income on the property. This was the case for us in COS, when we were looking to buy our second property and rent out our first our lender told us we needed a signed lease and proof that the security deposit had cleared in order to qualify for our new loan.

Gi'angelo Bautista · Answer

@Brian Plesscher

I think you should ask local short term rental property managers nearby for their 2nd opinion for what your market is doing.

Generally, we like to rent our single family homes to families. We don’t like rent single family homes to college students because they party. During COVID, they like to party on weekdays too.

If the house is rented by room on 1-3 month basis, we like to rent to college students. They don’t cause any trouble usually.

JJ P. · Answer

I think if you are nearby and self managing, renting to college students is a great strategy.   Generally the parents guarantee the rent, so rent payment is not the issue.   They are, however, not accustomed to running a household and are likely to be very gleeful about being on their own, unsupervised, and far from parental eyes.   In other words, they are hard on homes.  They will forget to turn off or on landscaping water.  They'll use your nice countertops as cutting boards.  They may even drive through with a motorcycle, as someone mentioned above.   Even if they are very responsible, they're still kids.  They have minimal or no "fix it skills" and are in the middle of developing an adults common sense.

Brian Plesscher · Answer

@Jordan Malara thank you, Mark is actually the one who suggested renting by the room to students. That is the direction I have been leaning but want to make sure I’m not missing an opportunity.

Sofia Sharkey · Answer

There is a podcast here in bigger pockets about a lady who chooses college towns for her short term rentals. She has several and is an expert in that arena. I would find the podcast, look her up, and ask how are STRs doing in college towns during the pandemic. That should help you with your decision because I know in my area all colleges have gone virtual so I would not be investing by a college right now. Things will change again but for immediate cash flow, I’m not sure. Best of luck!

Should we Airbnb, rent to college students, or rent to a family?

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