A rental property is one of the most lucrative assets you can have. If you happen to have one that is in proximity to a college campus, then you may just be sitting on a goldmine. A study conducted by the College Board revealed that students who live off-campus account for 44% of the college population.
Many landlords are not too keen on renting a space to college students. These students are in a transitional phase, which is synonymous with being young and immature. However, with such high demand and the chance to charge competitive rates, it wouldn’t be very smart to ignore such an opportunity. As a property owner, all you need to do is strategize effectively, so you can mitigate the risks.
This guide comes to you from Buffalo Niagara Realty Group, and it contains all the information you need about renting to college students.
What Matters Most to College Students in Buffalo, NY
While this information can be applied to almost any college student around the world, the focus of this piece is on the Buffalo, NY, area.
Long-term renters and college students don’t prioritize the same things. Large spaces and premium amenities have much less appeal to students than affordability and proximity to campus do. All students want is a place that isn’t falling apart, so they can work and sleep. The alternative is dorm living, which can be cramped and can even be costlier than renting a place off-campus.
Students are familiar with the relationship between upgrades and the cost of the rental. This means that you don’t need to worry so much about modernizing the home and paying for costly renovations.
For example, a SUNY Buffalo State student isn’t concerned with anything apart from the necessities. As a property owner, you just need to make sure there are no health hazards. You should also ensure that the roofs, walls, showers, toilets, plumbing, sinks, electric systems, heating systems, and gas systems are all in an acceptable condition.
Be that as it may, you can give your student customers a little more than the bare minimum to gain the upper hand against your competitors. Here are some of the things to consider in this regard:
- Campus proximity – This has been highlighted before, but you should never underestimate how important this is. Most of a student’s time is dedicated to classes, studying, work, and extra-curricular activities. There is time available, once travel isn’t consuming it. If a student attends Medaille College in Buffalo, NY, a rental property in Allentown is way more convenient than one in Lake View.
- Public transit and walkability – Students don’t always have cars, which is the reason that bike-share programs and public transportation can be so important to them. This means that as the campus, there should be dining, entertainment, and shopping options nearby.
- Affordability – This is another big one because college students aren’t known for their lucrative incomes. Some students even share housing and split living costs to make things more affordable. Though they may not be making much, they still have expenses to take care of. Therefore, the more money they can save, the better. So, while your profit is important, you should also charge figures that are both affordable to students and a fair market price. It’s wise to do some research to ascertain what to charge. You could do this by getting a feel for what similar properties in the area to your own are being rented for.
- Laundry – This can be a source of agony for many students. Their busy schedules mean that they don’t even have time to wash their clothes. Traveling to a laundromat to do so could also be a nightmare. Why not be that Buffalo landlord that makes it easy for student renters? Try to get a simple washer and dryer on the property. Even one that is shared by multiple units is better than none. Putting this in place makes your offerings more desirable than those of competitors.
- Wi-Fi – Who can live without Wi-Fi these days? Certainly not the students who need to get work and research done. They need entertainment too, and the internet allows them to stream music, movies, and TV. Of course, you can’t forget about video games and web browsing. You can make your property stand out if there are options for packages from various internet service providers. Some of the top providers in Buffalo, NY are Verizon, Spectrum, ViaSat, and HughesNet. Feel free to wrap it in the price of rent or make it free of charge.
- Safety – Students and their parents need a safety guarantee. While you never know what to expect, deadbolts, and adequate exterior lighting help students to feel safer. You may also want to consider having a secure area present for mail and packages.
Advantages of Renting to College Students
Now it’s time to review some of the great things about renting a property to college students.
Colleges consistently operate with new batches of students. You have a potential customer base so long as the colleges near your property are accepting students. Furthermore, many students who live in dorms don’t do so for their entire tenure, which means they start hunting for housing during the course of study.
Students tend to rent places together to split expenses, which is a perfect opportunity for you. This is because each tenant can pay an affordable amount towards the total, but that total can be profitable for you. Here’s a scenario to consider. Imagine that you own a three-bedroom property in Buffalo that is in proximity to Canisius College. If someone in the workforce wants to rent it for a family, you may charge $1,800 monthly for space. If you were renting to students, you could charge $2,100. This works because while the total is higher, each student only pays $700, which feels affordable.
Additionally, demand is a heavy driver of price. There is a never-ending need for convenient housing near college campuses, which is something that you can capitalize on. Once the cost is within reason, you can charge higher rents and get away with it. Research done by Fortune Builders suggests that a house can be rented for 40% more because of proximity to a college. The research states that the same 40% would be none existent if the house were even five miles away.
This is purely because of third party involvement. Students are not usually the ones responsible for their rent. Parents tend to be the ones that bear the burden. Therefore, you are more likely to get your payment on schedule, since the person responsible for it is more reliable. Furthermore, some financial aid packages and parents pay the whole semester’s rent upfront, which works out even better for you and everyone else who is involved.
Cheap or Free Marketing
There’s no need to put an immense effort into advertising properties that are near colleges. The location handles the marketing, and word of mouth works just as well. If you do want to advertise, though, many colleges have a student housing department that is willing to promote your listings. There are also student websites that display house listings. You can post your offerings on such sites for free.
As stated before, students just want a functional place that’s close to campus. There’s no need for you to worry about all the bells and whistles because of this.
Disadvantages of Renting to College Students and How You Can Mitigate the Risk Factor
While renting to students can be beneficial, there are also several drawbacks. This comes from a lack of responsibility and maturity present at the average college student age. Here are some considerations that should not be ignored where student tenants are concerned.
Employment, Credit, and Rental History
One of the best representations of a character a landlord can get is from a potential tenant’s history. However, students are young, which means that rentals and debt are likely new experiences for them. This makes the screening process a bit challenging because you can’t predict what future behaviors to expect.
What you can do is call the references they do have to try to understand who they are. Also, check if the student was expelled from student housing in the past. That is the college version of an eviction.
Another solution to this issue is to impose a cosigner requirement. Adding a parent’s name to the lease shifts the responsibility for payments and damages. There are landlords that require this even if the student has any usable rental or credit history.
If you do require a cosigner, remember that you need to screen this person thoroughly. An unreliable cosigner defeats the purpose. Going this route is likely to influence the students to be responsible too, since they don’t want their parents getting called. You should also consider imposing a security deposit requirement.
Property Maintenance Inexperience
Most of these students lived with their parents or guardian(s) prior to enrolling in college. This means that they are probably unfamiliar with caring for a property. Pests such as rodents are a concern if these students are sloppy. These young tenants may also delay reporting issues such as leaks until the issues escalate and cause a major inconvenience.
Many college students like to party, and the crowd can speed up the depreciation of your property. Students may not treat the place with respect, since it’s a temporary space for them. Unless you’re monitoring things, you could end up getting the property back in a run-down state.
The solution to this is the security deposit. Charge the highest amount you can legally, so you have some level of damage protection.
Also, ensure the lease agreement requires reporting of problems. Again, a cosigner requirement reduces the likelihood of negligence.
Note the condition of the premises at the beginning of the lease and walk through with the tenant at that time. It’s wise to include a clause in the lease that allows you to inspect the property every four, five, or six months. Remember to give at least 24 hours of notice before you do so. Don’t be the landlord who just strolls in with no notice because you own the place. That shows a complete lack of respect for tenant privacy.
Rent Payment Inexperience
Students may not pay on time for several reasons. They are still learning money management, and they may not make it a priority to allocate the funds. In fact, they may just forget altogether.
The best way to avoid this issue is to implement an electronic form of payment. It is best if this payment is automatic in the manner that a standing order at a bank is. You can even include a clause that makes everyone on the lease “jointly and severally liable.” In situations where you have multiple tenants, this means that if one can’t pay, the others must cover the outstanding amount. You also get some level of insurance for times when all the rooms in the property are not filled.
Of course, the security deposit helps here as well, which is why you should try to charge as much as is legally possible.
While students may not always be partying, they can be loud. To address this, you should place a noise curfew clause in your lease. This should allow for the comfort of neighbors. You may also use policy to restrict the number of guests that can visit. Consider getting security cameras set up too, and you should establish rules that prohibit noisy activities such as setting off fireworks.
Summer Vacancies and Turnover Frequency
It’s common to keep a student tenant for no more than a year. Though a degree takes four years to receive, students may change their housing situation each year. This means that you may be doing repairs to get new tenants yearly.
Additionally, if you start a semester with an empty unit, it may not be filled until students are looking for housing the following semester. Students prefer to sign short leases that cover them for the school year. This means that you may even need to look for summer renters.
You can incentivize students by giving rewards to repeat tenants or for referrals. You should also ensure that subletting is not done by stating so in the lease agreement.
Students may not take care to turn appliances or water off, which can lead to high utility bills. Keeping the lights on and blasting the A/C unit are common things for student renters to do. Before attending college, many of these students saw utilities as things that parents paid for. Since there is no real value attached to these utilities in the minds of students, wastage is very likely.
You could consider addressing this by making the tenant responsible for bill payments. This shifts the cost from you to the students and their cosigners.
Can You Refuse to Rent to College Students?
The short answer to this is usually no. If you do, it is categorized as discrimination. The Fair Housing Act does not allow for age-based discrimination. Only housing that is federally subsidized is exempt from this as students are not accepted in them.
Should You Rent to College Students?
There’s no denying that there are ups and downs to doing student rentals. However, it can provide you with a consistent, passive income. Just remember that you need to thoroughly screen potential tenants and cosigners before you accept them.
If the property is only an investment one, then doing student rentals is ideal. Since you can avoid costly upgrades and charge higher rent, you can end up with a huge investment return.
If the home is a family one that means a lot to you, ensure that your screening requirements are as foolproof as possible. Your tenants also need to know what you expect from them where house maintenance is concerned. After all, you want tenants who are willing to put in the effort required to care for your property adequately.
Your lease agreement needs to be strong, and it needs to account for as many scenarios as possible. You don’t want to end up with a situation down the line that the lease can’t cover. Ensure that you go over everything with both the tenants and the cosigners. Their ignorance can cost you, so you need to ensure that everything is seen and understood. Remember to note and communicate what happens if the lease is violated (this should be in the agreement). Emergency contact information for each tenant is also handy.
Note that you don’t want to be one of Boston’s absentee landlords. Students need guidance, and your absence can result in a great lack of it. Buffalo Niagara Realty Group recommends that you either hire a property manager or ensure that your residence is near the rental property.
A property manager handles all the little details, whether you’re an absentee landlord or not. There are many things that go into renting, which include finding tenants, tenant management, maintenance, etc.
Regardless of what the task may be in this regard, a property manager such as Buffalo Niagara Realty Group can handle it all.