3 Keys for Leasing to College Students
When you think of a college student, you probably have a picture in your head: 18-22 years old, recently graduated from high school, perhaps a member of a fraternity or sorority.
Renting to students like these has its appeals: college towns always have high demand for housing, low vacancies, and a highly competitive market.
Another benefit is that students are primarily looking for affordable, short-term housing. Between the one to three years they need housing, there’s little need for the latest upgrades or renovations.
Challenges include high tenant turnover, and the fact that many renters have little to no renting experience. Some may engage in behavior that may lead to property damage or complaints (think: parties, substances),
However, it’s important not to stereotype. Many college renters are quiet, responsible tenants. And a large percentage of university attendees are nontraditional students: older, enrolled part-time, financially independent, or parents with children.
So how should landlords approach college rentals? What are some best practices for renting to such a varied group?
Here are three keys you can use to mitigate the risks and reap the benefits of student leasing.
#1 Require a Co-Signer/Guarantor
If your target population is primarily traditional students, it’s best to require a co-signer or guarantor.
Why? Because recent high school graduates have little—if any—renting experience. They also have minimal income of their own, likely only from one or two part-time jobs. Traditional students often rely on their parents for tuition and living expenses while they focus on their studies.
These students will most likely not meet your income or rental history requirements. But their parents probably will. When renting to students who don’t meet your typical tenant screening requirements, always require a co-signer—a person who will take on the responsibility of rent payments if the student defaults.
In terms of day-to-day interactions, you should still communicate with the student—this will help them learn how to rent and build good habits, such as paying on time and looking after the unit. The co-signer should only step in when there’s a serious problem with nonpayment.
For many nontraditional students (those with full time jobs, more rental experience, etc.) a co-signer won’t be necessary. A best practice is to establish your minimum criteria and only require a co-signer when a student can’t meet them on their own.
#2 Clearly State Rules and Expectations
When it comes to student lease agreements, less is not more.
Don’t assume that student renters will know how leasing works. Instead, err on the side of caution and assume that your college renters need a little extra help when it comes to rental rules and expectations.
A good practice is to craft leases in clear, simple language with lots of detail. It’s not a bad idea to prepare an additional rental rules list including common sense knowledge like how to prevent clogged drains, reduce energy waste, and prevent frozen pipes.
For many first-time renters, this will be the first time they are responsible for caring for a property. Be clear in your expectations, and then hold your renters responsible for them.
Additionally, routine inspections are never a bad idea for student renters. Get your renters accustomed to your presence around the rental community and the fact that lease violations will not go unnoticed.
#3 Rent by-the-Bedroom
Lastly, if you’re thinking of renting to college students, rent by-the-bedroom.
In a unit with multiple roommates (as is typical for college housing), a typical lease structure holds the group jointly responsible for paying rent/utilities and caring for the property.
On the other hand, renting by-the-bedroom means that individual renters are only responsible for their portion of the rent and/or common areas. This way if one roommate defaults, the others aren’t punished.
The landlord also benefits from a by-the-bedroom arrangement. It’s much easier to get all bedrooms filled and maximize revenue when you rent by-the-bedroom.
Changing your lease structure to by-the-bedroom is easy on most property management software platforms. You can simply assign each student renter an equal portion of the rent, or unequal portions if the bedroom sizes or amenities differ.
Renting to college students is an appealing avenue for many landlords with properties near universities. However, like all types of tenants, student renters don’t come without their risks. The best way to minimize problems and maximize return is to follow these three keys.