Author Topic: Renting to Students  (Read 1969 times)

smallstache

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Renting to Students
« on: July 12, 2017, 12:51:57 AM »
I would like the community's thoughts on an idea I had for when my oldest goes to college next year.

I expect she will attend Florida State, Ohio State or some other state school.  Through the Post 9/11 GI Bill, the Veterans Administration will pay for her tuition, fees, and a location-based housing allowance for any state school in the country, or any private school that participates in the related "Yellow Ribbon" program.

Instead of living on campus, I propose to buy her a two- or three-bedroom condo using the housing allowance to pay most, if not all, of the mortgage and association fees.  I would then market the other rooms to other female students.  These payments would offset anything not paid by the housing allowance and maybe generate some extra income.

I see the benefits being not wasting money every semester by her living in the dorms.  Also, we have two other daughters that can follow in her footsteps if they choose the same college.  One of them will receive the same GI Bill benefit.

I see the downsides being:  possible personal safety and inconsistency of roommates.  These I might be able to control through vetting.  Also, I think there is social value to living on campus.  At 18, that meant something to me but at 40 it no longer does.

What am I missing?  I have a lot of experience with long term rentals, but no experience with student housing.

Rural

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Re: Renting to Students
« Reply #1 on: July 12, 2017, 05:34:20 AM »
Most large state schools require freshmen to live on campus - yes, this is a blatant money grab. You and she can investigate those requirements and she can factor them in to her choice of schools, but it's depressingly common.

GizmoTX

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Re: Renting to Students
« Reply #2 on: July 12, 2017, 05:51:53 AM »
I think dorm living is especially important for the first year; being on campus 24/7 & with a group puts a new student into the heart of the school. It also eliminates the expense of a car & a time consuming commute.

How will you deal with students dropping out & leaving the rent unpaid? It will be almost impossible to replace a tenant midterm.

Is your daughter able & willing to be a landlady? What if she decides to transfer?

The pressure for your other daughters to attend the same school for your housing is a factor.

Papa bear

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Re: Renting to Students
« Reply #3 on: July 12, 2017, 06:02:48 AM »
I can talk specifically to OSU as I have student rentals there.

 Currently, OSU requires you to live on campus for freshman and sophomore year (ridiculous). The area around campus is very difficult to purchase into and properties rarely list.  If you want to buy something around there, you'll need to network pretty diligently with other LL's and realtors that specialize in the campus area.  They will sometimes get unlisted portfolio sales that you won't find on the MLS.

Other than that, if you can find something for a reasonable price, it is a great cash flow.  0 vacancies, guaranteed tenant pool that rents 6-9 months in advance, high rents.  But you'll also have higher risk of damage and ticky tack repairs (omg the lightbulb went out! How do I fix that!  The toilet isn't flushing, how do I turn this off?)

Outside of OSU, you need to learn the rental market and season.  Some areas will rent by semester, others on a more traditional 1 year lease.  You also need to find out when students start to look for the rentals. At OSU, for instance, the leases run aug1-july31.  Students will start looking for the next year lease in October!  If you miss the time period, you will struggle to find good tenants. 

Let me know if there are other specifics that i could help out with. 


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Papa bear

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Re: Renting to Students
« Reply #4 on: July 12, 2017, 06:04:23 AM »
I think dorm living is especially important for the first year; being on campus 24/7 & with a group puts a new student into the heart of the school. It also eliminates the expense of a car & a time consuming commute.

How will you deal with students dropping out & leaving the rent unpaid? It will be almost impossible to replace a tenant midterm.

Is your daughter able & willing to be a landlady? What if she decides to transfer?

The pressure for your other daughters to attend the same school for your housing is a factor.

For the student dropping out risk, it is very common for the lease to be jointly and severably liable by all occupants, as well as their parental cosigners.  Risk is small.


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GizmoTX

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Re: Renting to Students
« Reply #5 on: July 12, 2017, 06:51:42 AM »
For the student dropping out risk, it is very common for the lease to be jointly and severably liable by all occupants, as well as their parental cosigners.  Risk is small.

As a student/parent, why would I assume the risk/rent of someone else leaving? I won't have the risk with a dorm. Yes, DS rented off campus when he could no longer live in a dorm (no more room). Picking compatible roommates with high GPAs significantly lowers this risk.

Papa bear

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Re: Renting to Students
« Reply #6 on: July 12, 2017, 07:03:13 AM »
For the student dropping out risk, it is very common for the lease to be jointly and severably liable by all occupants, as well as their parental cosigners.  Risk is small.

As a student/parent, why would I assume the risk/rent of someone else leaving? I won't have the risk with a dorm. Yes, DS rented off campus when he could no longer live in a dorm (no more room). Picking compatible roommates with high GPAs significantly lowers this risk.

On OSU campus area, you will very rarely find any unit that doesn't have those provisions built in.   

Plus as a student, you aren't renting a bedroom.  You're renting a house.  If one of your roommates moves, guess what? The rest of the crew needs to pick up the slack or find a sublease.  And it's very clearly spelled out that way. 

As for cosigners, it's rare that a student will have credit, income, assets, or a rental history. I'm not sure any landlord would rent to them without having verification of funds coming in.   Namely by way of a cosigner for the entirety of the lease. 

If you don't agree with those terms, a student at OSU can continue to live on campus and overpay for the conditions, or they can move much farther away from campus and live in a traditional apartment. But you won't be waking to class or living with your cohort. 




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CareCPA

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Re: Renting to Students
« Reply #7 on: July 12, 2017, 07:36:41 AM »
For the student dropping out risk, it is very common for the lease to be jointly and severably liable by all occupants, as well as their parental cosigners.  Risk is small.

As a student/parent, why would I assume the risk/rent of someone else leaving? I won't have the risk with a dorm. Yes, DS rented off campus when he could no longer live in a dorm (no more room). Picking compatible roommates with high GPAs significantly lowers this risk.
Why would a landlord assume this risk?

As a landlord, if I'm renting to students who are probably taking out thousands of dollars of student loans, with no significant income, and (for most of them) no real-world understanding of responsibility (because I remember how I was in college), why would I not have a cosigner and guarantor? I'm certainly not taking that risk, and in most college towns there is extremely high demand for off-campus housing. If you don't want to cosign for your kid, then I'll just rent it to the next kid in line whose parents will.

As GizmoTX said, your kid isn't renting a room in most cases. S/he is co-renting a house with other students. I wouldn't get paid by the bedroom, I would accept one rent check for the house - however they pool their funds to come up with that money is up to them.

ETA: To OP, living in the dorms my freshman and sophomore years was invaluable. It not only taught me social skills and helped me establish friendships, but it taught me to deal with uncomfortable issues and obnoxiousness (like 3 AM parties on a Tuesday). I would certainly credit this experience with helping me become a more outgoing and well-rounded person.
« Last Edit: July 12, 2017, 08:16:21 AM by CareCPA »

marielle

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Re: Renting to Students
« Reply #8 on: July 12, 2017, 07:47:50 AM »
As a recent graduate, I would also recommend her living on campus at least the first year. That is how most students will make friends. It's not easy just making friends from classes the first year because a lot of them will be gen-ed classes with 100-200+ students. Campus should have a lot of activities to get involved in and it's super easy when you live on campus. When I started living off campus, I realized I didn't even know what events were going on anymore, and each year I was involved less and less (partially from being busier of course!).

Most student apartments close to campus are rented by room, not by the entire apartment/house. So the student and co-signer is responsible for just that portion of the rent. It would take a group of more responsible students or friends to go in together on an entire apartment. Perhaps older students or grad students. Definitely get a co-signer though. I just don't know if it's feasible to have the cosigner responsible for the ENTIRE rent if one student drops out, I've never heard of that when I was a student, unless it was specifically not student housing. With multiple strangers living together that seems a bit weird.

gregg687

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Re: Renting to Students
« Reply #9 on: July 12, 2017, 08:01:59 AM »
I'd recommend have her live in the dorms freshman year and then consider this as an option.  Then she will have established a good social network of possible friends to live with and know for sure that she wants to be at the school for the next three years.  It seemed in college that students transferred most frequently after the freshman year.  In my opinion, it's a good idea though, and would be an even better idea if your other kids picked that same school. 

Rural

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Re: Renting to Students
« Reply #10 on: July 12, 2017, 02:02:51 PM »
I'm not so sure living in the dorms is such a good idea. I have good students in both, but frankly the ones who live in the dorms are less responsible and less likely to get their work for classes done as a group than the ones who live off campus. I think it's partly a reflection of maturity - at my school, the kids in the dorms are mostly supported by their parents and the ones on their own (with much lower rent) are paying for themselves, even if both are 18. Also, all the programming is a big distraction from classes, and that impacts the dorm students more.


This is the general rule for freshmen. By the junior year or so, I'd say it's all evened out. That's probably selection bias - those who make it to their junior year are doing well regardless of where they live.

smallstache

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Re: Renting to Students
« Reply #11 on: July 13, 2017, 04:49:24 AM »
Thanks for the info on OSU, I need to look into that more.  FSU does not require freshmen to live on campus.

My school sort of did because persons under 19 could not sign a lease. They could live on campus or "with parents." If I were to own the place, that is a huge hole I could drive through. But it doesn't help me find roommates for her.

My parents weren't as enterprising as I am to go down this road 20-some years ago.

Car Jack

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Re: Renting to Students
« Reply #12 on: July 13, 2017, 06:30:01 AM »
I went back to school when I was 22.  I lived on campus and my second semester became a resident assistant.  There are good and bad things with living in a dorm but you learn how to deal with situations.  I continued in campus apartments with 4 other room mates.  The ability to form on campus study groups, participate in other activities (I was on the bicycle racing team) and simply get back to the dorm room following an all nighter and an 8am exam to take a nap is valuable.  Add to that the fact that surrounding many colleges, the neighborhoods can become pretty sketchy.  Want your daughter to be mugged once or twice a semester walking the 5 blocks? 

I think it's a bad idea.  If you want to rent out a house that's not close enough to drive to, that's a bad enough idea, but this is a worse idea.  I do understand thinking that maybe it would work......heck, I've thought of it for my son who's in college just 12 miles from home, in a dorm but thought better of it.

Jon Bon

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Re: Renting to Students
« Reply #13 on: July 13, 2017, 06:50:28 AM »
I went back to school when I was 22.  I lived on campus and my second semester became a resident assistant.  There are good and bad things with living in a dorm but you learn how to deal with situations.  I continued in campus apartments with 4 other room mates.  The ability to form on campus study groups, participate in other activities (I was on the bicycle racing team) and simply get back to the dorm room following an all nighter and an 8am exam to take a nap is valuable.  Add to that the fact that surrounding many colleges, the neighborhoods can become pretty sketchy.  Want your daughter to be mugged once or twice a semester walking the 5 blocks? 

I think it's a bad idea.  If you want to rent out a house that's not close enough to drive to, that's a bad enough idea, but this is a worse idea.  I do understand thinking that maybe it would work......heck, I've thought of it for my son who's in college just 12 miles from home, in a dorm but thought better of it.

Really? Like that is what you think is going to happen despite having little to no information?

But seriously, studies have shown that kids living in dorms do better in school. Its the reasoning behind requiring kids to live on campus the first year(s). Yes it also happens to be a money grab for the university so it is what it is.

I think the traditional route is pretty good, have them somewhat supervised the first year in the dorms. Let them get used to the college experience first, make friends etc. Then let them move off campus. Allow them to set up their utilities, pay real rent, and deal with all the little things living on your own requires. The things you learn in college don't all happen in the classroom.

But yes buying a house for your kid to live in is a good plan. Personal experience, I lived in a 8 bedroom house for 3 years. We paid over 90k in rent during that time. We probably could have purchased the house for 250-300k at the time.

YMMV