Student housing—profitable, or a likely disaster? The value of renting to college students is often up for debate among landlords.
Some landlords believe students to be too unreliable. They don’t want to risk putting their investment in the hands of someone with little renting experience and credit history.
On the flip side, many students are responsible young adults or at least supported by their financially responsible parents. If you live near a college town, you may receive student applicants even if you don’t advertise your properties as student housing.
The true risks of student housing ultimately depend on the kind of students you have. Of course, you can’t control which students want to rent your housing. But by renting to students, it’s possible to access benefits that even counteract the risks of inexperienced undergraduates.
Here are some pros and cons of renting to students for your consideration.
Pros of Student Housing
Student housing is always in high demand. Properties located near universities receive attention from renters year after year.
This consistency is good for your business—you’ll always have a steady stream of renters. Vacancies will be rare, so you can generate revenue without interruption.
More Roommates, More Rent
Students often rent with roommates to make the cost of housing more affordable. It may seem paradoxical, but you can actually collect more rent from these units. If three roommates share the cost of an apartment, each usually pays less than they would for a single unit, but more than a third of the total cost of a single.
You can make much more money by renting an apartment to roommates than if the unit were the responsibility of one renter alone.
Less Marketing Required
Student properties market themselves. Your proximity to the university is often all you need for news of your rentals to travel by word-of-mouth. Students and parents will find your listings online and navigate to your website.
You can also use campus resources to spread the word about your vacancies. Student housing is one circumstance wherein paper advertisements are effective. Students on campus are a dense population who tend to gather at central locations like academic quads and student centers. Try posting paper copies of your listings on campus bulletin boards, at the library, or in the student center.
Renters without experience often apply with a co-signer or guarantor, who is legally responsible if the tenant defaults on payments. You should always require a co-signer when renting to students. Co-signers are extra assurance that rent will be paid on time.
Relax Amenities and Upgrades
Students are rarely looking for the most luxurious properties. They usually just want an affordable option near campus. With no high expectations to meet, you can relax your plans to add amenities or upgrade your property. Students will find you anyway.
Cons of Student Housing
Inexperience is the number one concern many landlords cite against student renters. Undergraduates often apply to college directly from high school and have no prior renting experience. They might forget to pay rent, neglect maintenance concerns, or break the rules.
High Turnover and Early Lease-Breakers
Due to semester scheduling and university rules, student rentals have high turnover. Students will inevitably graduate and usually move to seek jobs. Undergraduates are often required to live on campus for two years, which means a student enrolled in a four-year degree only needs housing for their remaining two years.
What’s more, students often want to break the lease early. They may want to study abroad or move in with another roommate.
If you rent to students, prepare for high and frequent turnover costs.
Risk of Property Damage
College students are not known to be the most orderly. They host parties, make mistakes, and tolerate uncleanliness. There’s always the risk of property damage to consider when renting to students. A generous security deposit (or the maximum allowed by state law) is a necessary assurance.
If your properties are near a university, you will undoubtedly have high competition. Nearby landlords are seeking tenants too, and you’re both targeting the same pool of applicants. Don’t be surprised if you are forced to lower prices to stay competitive.
Welcoming Student Renters
Between property damage and turnover, student renters may seem like more trouble than they’re worth. However, adequate preparation—namely, requiring co-signers and security deposits—can reduce the risks. Online leasing should also be a top resource. On your property management software, you can screen co-signers and collect rent online, payment method younger renters are already familiar with.
With the right tools and a few extra precautions, you can make student housing highly profitable for your rental business.