Renting out to College students?

Question

College students... as tenants... oh boy.

I came across a property on redfin that a local informed me was near a college, which got me thinking about house hacking large homes near colleges as dorms.

Thoughts? I know I'm not the only person to think this, but is it possible or is it just a horrible idea?

Dave Poeppelmeier · Answer

Yes, we all remember how we were when we were 19-22 years old... But renting to college students isn't sitting by the phone waiting to hear that your house burned down. If you can find an opportunity close to a college campus, you can treat it as a Student Rental even if you don't have students in there. You have to make sure that the college students feel that it is in a Student Rental area: sometimes just by  crossing a street you're no longer in what's considered a Student Rental area. If you do have a property in that area, you can charge the higher Student rates (I always have everyone on one lease) even to non-students. You might be able to make money with individual leases, but that's where it can get crazy having 4 leases for 1 property, etc.). You just have to make sure that the leases stick to the Academic Calendar: August - July, to make sure you can keep renting to Students when a move-out occurs. The key is you have to be providing a nice house/unit. It doesn't need to have granite countertops (however, that's also a segment of the student population you can go after), but it needs to be clean and solid, with no holes in walls, doors that don't work, etc. If students are in a nice unit, there's much less of a chance they will jack it up. You also need to know where their money is coming from like @Andy Sabisch mentioned. Scholarships? Mom and Dad? Working 30 hours a week in addition to going to school? If it's scholarships or Mom/Dad, you don't have to worry about credit checks, just do a background check so you know if you have someone with a history of drugs or getting into bar fights wanting to move in. It also helps to have parents be co-signers, so that way 1. They're on the hook for repairs greater than the security deposit and 2. The kids will worry that Mom and/or Dad will kill them if they screw up. The other thing you need to keep in mind is the leasing schedule. At some schools, the kids look for their next house in the Spring, but at other schools, they're looking for the next house the Fall of the previous year! It's way different than just a normal LTR where you have the move out/clean-up/marketing/leasing process. Overall, it's definitely a niche of RE, but a profitable (and fun to me) one as well. If you are going to do it from afar, you MUST have a PM that knows what they're doing with Student Rentals. Ask how many Student Rentals they manage, ask what they consider Student Housing (sometimes a LOT different than what students would consider), and ask if they charge more to manage those. Otherwise, it's probably better to manage something like that on your own locally so you can become more of an expert on your local college/university. Let me know if you have any other questions!

Billy Daniel · Answer

We have students in a couple of our houses.  They're pretty good tenants.  Of course, they had to pass the same background/credit check as anyone else.  I understand the hesitation to rent to them though.  We had the same thoughts, but were wrong.