Rental Property Investor · MI · Member since 2018 · 51 posts · 64 votes
We are down to the wire here trying to find college students for our rental that we purchased during COVID. Many places are still available near campus and with the end of August nearing and our money running out with the rehab.... it’s not looking promising.
Has anyone had a luck pivoting on college rentals in a very “college” market area? What strategies have you used to get renters in while other houses sit vacant?
Rental Property Investor · Nashua, NH · Member since 2014 · 598 posts · 477 votes
6y
This feels like a highly local situation. Was pouring over dozens of similar threads over the last couple months in prep for turning over a college rental myself in the middle of COVIDness, which actually happened just this week in a manner faster and with more demand than I have ever seen before (local university cut on-campus occupancy by 50% and pushed students off campus).
Outside of traditional students, I’ve also seen strong demands this year from folks with kids looking to get settled in prior to start of school in September. In 15+ years self-leasing proprieties I’ve always found strong demand through end of September here in the northeast USA, with a rapid drop-off in October/November and a black hole from December - March. Given that 4 month dead zone, it’s often in the best interest of northern state PMs to do anything/everything possible to fill a space prior to the October cold snap drop-off.
One the most overlooked things that most PMs/leasing agents do when renting out a space is to go generic: posting ads on CraigsList, newspapers, and national listing sites instead of investing the time at the start to think more about what their ideal renter looks like, where they live/work/play, and going after them by advertising where they are, which could be specific workplaces, housing intermediaries assisting folks trying to get back on their feet while providing guaranteed rental income to owners.
United States · Member since 2019 · 52 posts · 76 votes
6y
Interested to hear responses on this. I can tell you that local apartment complexes near me (which is near a large university) have slightly lowered their prices and begun offering "specials" such as "first month 75% off when you sign a 12 month lease" or "security deposit waived this month only." It shows that they're under a bit of strain, but at the same time, they don't have high vacancies right now.
Have you looked around your area and checked vacancies now? If some bigger established locations haven't dropped their price much and aren't suffering from higher than normal vacancies, then the virus may not be your problem.
Also, you specifically say college renters. Are you trying to rent by the bedroom? Have you tried renting by unit instead?
Rental Property Investor · MI · Member since 2018 · 51 posts · 64 votes
6y
@Alexander V. Thanks for your reply. We are renting by the unit, but this is a medium size town in Michigan so the price that working families could pay ($850 maybe) is much lower than the $1,500 we were hoping to get from students each month.
We are also including all utilities including WiFi, so we are looking at around $2000 per month in just expenses for the duplex as a whole.
United States · Member since 2019 · 52 posts · 76 votes
6y
I don't know anything about your area, but that strikes me as a very large difference between what the average renter could afford and what the college students are expected to pay. College students are often nearly broke themselves, aren't they?
What is the configuration of the duplex? Are the units 1/1 or 2/1?
Realtor · Coeur d'Alene, ID · Member since 2020 · 64 posts · 39 votes
6y
How about switching to vacation rental until the students come back? I know Air B and B also has a program for jobs that travel like nurses. Might help you supplement for the time being.
Have you thought about looking in to section 8 to see if you could get a higher price? I'm not sure if that would also help rent it out quicker because lower income families are more in need right now. Just a thought.
Real Estate Agent · Phoenix · Member since 2020 · 27 posts · 49 votes
6y
I think that the first thing that I would do, is call all of the campuses (Community Colleges and Universities) and ask when they are going back to in person classes. Ask a few different academic advisors between the different colleges. Better yet, go a step beyond that, research what those local colleges are best for (nursing, law, etc.) and ask THOSE academic advisors.
Then draw a game plan that just reduces your cost until that in-person start date. AirBnB, working classes, etc. I think in your situation, it is just a waiting game and the market is testing how long you can hold on to the property.
These are just the steps that I would take if my goal was solely to hold on to the property and rent out long term.
Columbus, GA · Member since 2020 · 51 posts · 31 votes
6y
may have to lower the rental price to get a tenet in also make sure you are using all forms of advertisment to get your place exposure make sure to post on all facebook pages those get a lot of attention craigslist signs near campus signs near the beer store near campus lol.
Rental Property Investor · Nashua, NH · Member since 2014 · 598 posts · 477 votes
6y
This feels like a highly local situation. Was pouring over dozens of similar threads over the last couple months in prep for turning over a college rental myself in the middle of COVIDness, which actually happened just this week in a manner faster and with more demand than I have ever seen before (local university cut on-campus occupancy by 50% and pushed students off campus).
Outside of traditional students, I’ve also seen strong demands this year from folks with kids looking to get settled in prior to start of school in September. In 15+ years self-leasing proprieties I’ve always found strong demand through end of September here in the northeast USA, with a rapid drop-off in October/November and a black hole from December - March. Given that 4 month dead zone, it’s often in the best interest of northern state PMs to do anything/everything possible to fill a space prior to the October cold snap drop-off.
One the most overlooked things that most PMs/leasing agents do when renting out a space is to go generic: posting ads on CraigsList, newspapers, and national listing sites instead of investing the time at the start to think more about what their ideal renter looks like, where they live/work/play, and going after them by advertising where they are, which could be specific workplaces, housing intermediaries assisting folks trying to get back on their feet while providing guaranteed rental income to owners.
Rental Property Investor · MI · Member since 2018 · 51 posts · 64 votes
6y
@Alexander V. The units are 3/1 and 4/1. Since we just bought this month, I could be underestimating the rent for working people. Thankfully we have a property manager that knows much more about the local market, but yes, still having trouble.
United States · Member since 2019 · 52 posts · 76 votes
6y
@Kelsey Folger, I can guarantee you that no university is going to be able to tell you when classes will resume normally at this point in time. Moreover, I think what @Cliff H. says is worth bearing in mind, that college rental demand is typically highest through September and drops precipitously in October.
Again, I don't know the specifics of your location, but you said that this property has a 4/1 unit and a 3/1 unit. That seems extremely large for a college student. Small groups of friends who go to the same university may occasionally rent a 4 bedroom unit and be roommates, but that's still a roommate situation and requires them to know each other in advance. If I were in your position, I would put the bedrooms up for rent. This will do 2 things.
First, it will allow students with a lower budget who lack a pre-existing group they want to room with to still afford renting from you. This could significantly increase your pool of prospective tenants. Second, it breaks your units down into smaller pieces, so you're no longer in an all-or-nothing situation. Even if you only end up leasing 2 bedrooms in each unit this semester, that's much better than nothing, and you can bounce back later when the pandemic wanes.
If you're in a great location very close to the school, you can even sometimes make more by leasing rooms instead of units. Just this week I heard of an investor in Tampa with a quadruplex near the university. All four units are 2/1, and he rents out each of the 8 rooms for $600/month... He's grossing $4800 per month on a property that he bought for 250k.
Rental Property Investor · Nashua, NH · Member since 2014 · 598 posts · 477 votes
6y
Hi @Alexander V. concerning your recommendation to rent by the bedroom, is that a strategy you’re leveraging in your portfolio? I’ve absolutely heard of investors killing it by renting out by the bedroom but been reluctant in going down that road myself over concerns that I’m then (logistically) managing multiplying leases/overhead by the bedroom vs door, particularly with college students who are then deciding they don’t like their housemates and pushing to break lease mid-year when things are far harder to rent back out.
United States · Member since 2019 · 52 posts · 76 votes
6y
@Cliff H., I'm not currently leasing on a per bedroom basis, I'm just brainstorming options to help the OP. I would certainly try it though if I had properties very near a university.
I think your concerns are partially justified, but it can still ultimately pay to lease by the bedroom. Here's the reason why. Typically, when you have smaller and cheaper units, your return is higher but your risk is also higher due to the type of tenant that it attracts. College students can go for smaller cheaper spaces, but they are more reliable than others that such an arrangement may appeal to. Their financial state and willingness to accept a such a space is purely due to their age. Yes, you'll have more leases to deal with, but if you're leasing for the entire school year (or just the entire year), it ultimately isn't that much more work while the payoff may be substantial as compared to renting on a per unit basis.
Moreover, college students are typically able to get a parent to co-sign. If they try to break the lease, handle it like any other person trying to break the lease--although I don't think that college students are quite as rowdy and fickle as some make them out to be. Plus you can use special screening practices for college students. They often don't have credit scores or a prior landlord for reference, but their parents' income will say something about their background, as will their high school GPA and what they want to major in. The straight A physics student from Princeton is not going to be throwing house parties, and if he does, his parents will be able to pay for the damages.
Those are just my thoughts. I've known several people who have done this with great success, so I personally wouldn't feel nervous about trying it if I had a property for which it would fit. Based on the limited information I have, OP's property and circumstance may be a good fit.
Rental Property Investor · Eden Prairie, MN · Member since 2017 · 35 posts · 13 votes
6y
We closed on our property July 10th and leased to non college renters on July 15th. This was a college house for the last 10 years and in the month prior to closing, we showed or had interest from non college students. The university was still moving forward with classes on campus at that point. If you are struggling to find college students, I’d consider opening up your options.
To help with expense maybe reduce the utilities you are covering and maybe consider PM the property yourself? There are free platforms out there that help with screening and listing your rental. If it’s too far away to show the property, ask your PM or local agent.
You’ll have to run the numbers yourself, but it might be better to take a few hundred dollar loss each month vs being vacant for a couple months.
Rental Property Investor · Columbia, SC · Member since 2010 · 1k+ posts · 2k+ votes
6y
@Kelsey Folger there are a tremendous amounts of upside to owning student rentals but the biggest downside IMO is leasing them (at least in my market) is usually binary. You either do or you don't. Lowering the rent, sometimes even in half, usually doesn't help much at all.
In 15 years I've had several (maybe 10 or so) properties go vacant for an entire year. It sucks. There's no other way to put it.
Most of the student rentals I have are also only set up for or in locations that students want to live. What person/family/young professional/drifter wants to live in a 80 year old duplex a block behind 30 bars for $3,000/month?
The one recommendation I can give you is that it may be worth trying to do a furnished short term rental (3-6-9 months) in your unit instead. I have found a decent amount of interest in a furnished unit with flexible lease options. It "solves a problem" for some people looking in unique situations.
No expert seems to know how long this virus is going to last and they have not confirmed that it will not mutate and become an annual problem until the end of time.
It is strange how businesses that are goldmines tend to come to an end and it becomes time to pull out your tent stakes and move to a new area. Some companies were still pushing the sales for buggy whips and wooden wagon wheels several years after gas engines were roaming the roads.
If you can't rent the property to a family then I would not waste one minute putting the property on the market if it is going to cause a financial hardship that causes you to dig yourself into a hole that is impossible to escape from.
Cut your losses early and move onto something profitable, or just keep your cash in a safe place until you find a sure-thing investment. Every investment decision needs to be bases on the risks and not so much about the rewards.
I dumped a lot of properties and took a lot of heavy losses during my past 55 years, but I am 100% positive that every time I dumped a dog it was the right decision and I made even more money on my next investment.
The best internet advertising we use for renting units is zillow.com. I think it costs $6 per week for each rental unit and we get 6 to 10 leads for each unit every day.
Rental Property Investor · MI · Member since 2018 · 51 posts · 64 votes
6y
@Will Gaston thanks for that advice! Yes, I'm having trouble imagining a family living in our duplex as well. It's a total college neighborhood it seems -- old houses, smaller kitchens with little space for a dining area, no yard to speak of. If there were more bathrooms in our units I would maybe think about renting by the room, but what four strangers want to share one bathroom?
I like your idea of a furnished rental, that sounds like it would maybe attract more people, and with a shorter lease term (3-6 months) then maybe it wouldn't be so bad if they had to live with a stranger. I due to have our fourth baby in 3 weeks so I'm not sure I could swing furnishing this place an hour away at this time, but it's a good plan to have for the future if we hit a snag again.
Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
6y
The 2020/21 school year is going to be a challenge. And that passes down to landlords, especially for the first quarter of the year. I don't think there is a way out, other than to slash your pricing and over-advertise. The market economy does this well, prices and products adjust to the current demand.
Real estate tends to be long term investments. I think in terms of decades, not one year. Demand shall return for your product sooner than later. In the long run, online education, especially for 2nd tier universities, will be growing.
United States · Member since 2019 · 52 posts · 76 votes
6y
Best of luck to you whatever you choose to do. I agree that a bunch of strangers wouldn't want to share a bathroom, but that's precisely what happens in college dormitories anyway. Virtually none of them have private bathrooms, they're typically shared between 4-12 strangers. I just don't see a single college student renting four bedrooms when they can only use one bed at a time, and the volume of groups of friends looking to rent an entire house is going to be far lower than the volume of individuals looking to rent a room. Plus, the type who rent the entire house are also far more likely to throw house parties in "their" big house.