Owning rental properties in a college town can be extremely rewarding. This is because you always know you will have a steady stream of tenants, as long as the college operates. However, renting to college students can be somewhat of a risk, especially because they typically aren’t full-time employees and can have a track record of being irresponsible with their newfound freedom.
However, this doesn’t mean you shouldn’t rent to college students. As long as you know the risks and benefits and how to maintain a property that’s suitable for young adults, you’ll be able to generate a steady stream of passive income. Take a look at our top three tips for landlords renting to college students.
1. Know the risks
Any tenant, whether a college student or a working adult, can come with their own risks. However, renting to college students brings a new set of risks that are unique to their situation. Some areas of concern you might want to be aware of include:
- Insufficient credit history
- Inexperience paying bills on time
- Potential for partying and noise complaints from neighbors
- Seasonal gap when students go home for the summer
While these risks can be cause for concern, renting to college students can be an extremely successful venture. Keg parties and large gatherings might make you wary, but for the most part, college students are there to look for a place to call home while they work toward their degree. And in most cases, homes in close proximity to the college campus are typically owned by other landlords who also rent to college students, meaning a lower risk for angry neighbors.
2. Clearly articulate the terms in the lease
College students moving off-campus may be too excited for their first “real” home and will quickly gloss over the terms in your lease. To ensure everyone is on the same page, make sure you meet with every student living in your property to go over the lease. For example, your home may be a month to month rental, where the lease lasts for 30-days and auto-renews unless you or the tenants provide a notice of non-renewal. Or, your lease might specifically state no pets of any kind, that some students might ignore.
To ensure your terms and conditions are followed, stress the importance of what can happen if they break the lease, such as a fee if they fail to pay rent on time. As a landlord, some terms you may want to consider including in your lease include:
- Tenant’s duty to maintain the property, such as keeping the premises clean and tidy
- No smoking on the premises
- No keg parties or large gatherings
- Limit on the number of nights a guest can stay
- Landlord’s duty to repair or maintain the property
- Security deposit
- Roommates and subletting
These are just some of the terms you may want to consider including in your lease. However, as the landlord, you can include any terms that pertain to your specific situation, as long as they abide by federal, state, and local housing laws.
3. Ask for a co-signer
As you can assume, most college students won’t have a full-time job. This is because they’ll be too busy going to class, participating in extracurriculars, and studying. Because of this, they might not have a steady flow of income, which can make it challenging for them to pay for rent, especially if they’re not taking out a student loan for housing.
One way to prevent your college tenant’s from failing to pay rent on time is by requiring a co-signer to sign the lease. In most cases, a family member such as a parent or guardian will be listed as a co-signer. This is because they most likely have a thorough credit history that can give landlords peace of mind that they’ll be paid rent each month. As always, make sure to screen the co-signer before signing the lease to ensure they have a positive credit history with proof of on-time payments.
Finding the perfect college students for your rental property
Renting your property to college students can be a nerve-racking experience. However, if done carefully, you can have a great experience while generating some extra cash. To ensure you find the perfect tenants, consider these three tips for landlords renting to college students. In addition to these tips, make sure to think like a college student, too. When asking for rent payments, create an online rent collection system. And, when marketing your rental, post on mobile apps and websites. College students are tech-savvy, and this final tip can make your renting experience that much better.