Author Topic: University student rentals?  (Read 2823 times)

Travelling Biologist

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University student rentals?
« on: July 08, 2015, 01:17:01 PM »
Hi all. I've thought about investing in rental property for years, but after discovering this blog and a few others, I'm actually giving it serious consideration. I've been doing a lot of reading over the past few months, and am meeting with a realtor who specializes in investment properties next week. I currently work at a university and was a university student/renter for over 10 years and three degrees, so that is why renting to students appeals to me. But I realize that I probably was not your average tenant as I lived with my fiance/husband in small 1-3 bedroom places. Most of the student houses around here seem to have 5 or more bedrooms, and I can see from my calculations that this is how you get decent cash flow. I can see how the high turnover and general messiness and partying of students would be a pain to deal with, but I assume I would just budget more for maintenance. Any personal experiences?

clarkfan1979

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Re: University student rentals?
« Reply #1 on: July 08, 2015, 04:46:45 PM »
An upside is that your vacancy rate should be close to zero. I own a 4 bed/2 bath near a University (1/2 mile) with 30,000 students. The vacancy rate of the neighborhood is less than 1%. My vacancy rate has been 0% for the past 8 years. Total mortgage with insurance and taxes is $950/month and rent is $1900/month.

Yes, a little more wear and tear. However, any additional repairs get taken out of their deposit. Biggest limitation is turnover. However, turnover doesn't necessarily mean vacancy. Turnover will require more of your time or more of your money going to property management.

I also have a 3 bed/2 bath that is 4.5 miles from a University of 15,000 students. I hope to rent it out for the first time next month. The vacancy rate of this will probably be around 5-10% because it's not as close to the University.  Mortgage with insurance and taxes is $700/month + $200 for yard maintenance and property management for a total of $900/month. Rent will be $1400/month.

I am a little biased. I love student rentals because I understand them. I have spent my whole life living near colleges (undergrad, grad and now faculty). It might be scary for some because they might not understand it. However, if you understand the process and culture, go for it. Maximize the value of accidentally learning about a topic and develop the skill. I would start small to account for beginner mistakes. I am still making them. Good luck!

Travelling Biologist

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Re: University student rentals?
« Reply #2 on: July 09, 2015, 11:58:58 AM »
Thank you! I was kind of expecting a big reality check or some really negative experiences and this makes me feel better. I'm getting pretty excited about my meeting next week!

Dee18

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Re: University student rentals?
« Reply #3 on: July 09, 2015, 01:55:49 PM »
Another idea:  find out about the graduate schools' admitted students days and orientation programs.  See if there is a way you can advertise to those students even if it's just a flyer on a bulletin board.  I have a friend who routinely rents to law students.  They have had background checks for bar admissibility, most spend way more time studying and working than partying, and they usually stay for three years.

Zamboni

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Re: University student rentals?
« Reply #4 on: July 09, 2015, 02:09:44 PM »
Graduate students are probably often better tenants than undergrads.

Be sure to check on the student housing policies of the nearest schools.  Around here they range from "undergraduates can live anywhere" to "all first year undergraduates students must live on campus in university housing" to "all undergraduates must live on campus in university housing for three years." Needless to say, there isn't much of an undergraduate rental market around the last place listed.

Travelling Biologist

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Re: University student rentals?
« Reply #5 on: July 16, 2015, 01:35:41 PM »
Thanks everyone! I met with the agent and he was pretty down on student rentals, which surprised me. There were many reasons I won't go into here, but one was that it is hard to fill the 5 or 6 bedroom houses that students rent around here. So, as a compromise, we found a small duplex where each unit has 2 bedrooms. I think this is something that could appeal to graduate students or law/medical students. It is also completely renovated inside. I think it seems like a good deal but I am super nervous about it.

Papa bear

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Re: University student rentals?
« Reply #6 on: July 16, 2015, 02:02:25 PM »
The best return on housing near the university I have rentals in are the 4-8br units.  I'm not sure why they think it will be hard to rent one out.

Upsides: great rent and return, 0 vacancy, parental cosigners, rents months before the current lease is finished

Downside: being involved with roommate issues when it starts to concern you collecting rent, stupid drunk college kid damages, very rarely will have anyone longer than 3 years at one property


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BlackDog

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Re: University student rentals?
« Reply #7 on: July 16, 2015, 03:17:43 PM »
I've got 3 properties rented to students (in New Zealand) and love it (2 x 4 bed, 1 x 5 bed).

Yes, they are messy. Yes, they do not look after the house in the same way that you or I would. Yes, there is usually minor damage to be repaired like cracked windows, holes in walls, etc. though the bond should cover this.

On the plus side the rent is generally paid on time and is higher than a rental to non-students, students are easy and fun to deal with, vacancy is 0 days if you plan the advertising sufficiently in advance, the property does not have to be entirely salubrious and can have worse parking/access than properties rented to non-students without impacting the rental income.

Travelling Biologist

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Re: University student rentals?
« Reply #8 on: July 16, 2015, 06:31:11 PM »
Thanks for the input Papa bear and Black Dog! Many of these things are definitely true here (more rent for the same size house if rented to students), but there are now many houses near campus. He said he had a hard time finding groups of five students who knew each other and wanted to live together, so he would get groups of 2-3 at a time to fill the house. But that meant separate leases, and the parents didn't want to co-sign if there were other students on the lease. How do you handle this?

His house was also a bit farther from campus, and as more housing became available near campus, his house became harder to fill each year. The one we put an offer on is a bit closer. But it is also much nicer on the inside than most student houses, so I am hoping that will make it easier to rent for a decent price.

Papa bear

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Re: University student rentals?
« Reply #9 on: July 17, 2015, 06:27:47 AM »
I require a cosigner if the tenant does not have proper income or assets to pay for the rental.  All tenants are jointly and severally liable (as are cosigners).  For the university area I have rentals, the renting "season" starts 7 months before the lease begins.  You get your pick of tenants if you list early.  If parents don't want to cosign, they can always look for housing elsewhere.  (Which won't be near campus because the cosigning rules are ubiquitous).

Some of the units in town are moving towards separate bedrooms and leases, but each room typically has a separate entrance and bath (tenants share kitchen and common areas) and these are renting for much higher than other rentals.  It's difficult, however, to turn 100 year old existing housing stock into this set up and most of those are tear down and new construction.

You will also run into helicopter parents who will try and handle every situation in the house, which can be awkward when they live 200 miles away. 


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Travelling Biologist

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Re: University student rentals?
« Reply #10 on: July 17, 2015, 07:01:05 AM »
Thanks, this is very helpful!

K-ice

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Re: University student rentals?
« Reply #11 on: July 20, 2015, 05:14:50 PM »
The largest unit I dealt with is 3 bdm.  On the lease all sign and all are responsible.  They unfortunately pay separate but if one doesn't pay you can legally go after any of the others. If one person wants out after a year we tell the others two to find someone suitable.

I'm not sure about your area, or the experience of other MMM, but I think that is safer and easier than renting room by room. (Maybe you get a bit less $$)

I am more comfortable with the 2xDuplex you mentioned. 

Also, for most students we ask the parents to co-sign. Exception was a 25+ MSc student.  It is normally not a problem. If it is, we don't want them as tenants.

Also, we give them the lecture that it is a quiet rental, they can go party 2 blocks away on the main drag but this street is quiet. We are looking for responsible, studious tenants.  Some students walk away at that point, but all parents have been "Where can I sign?".

NoNonsenseLandlord

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Re: University student rentals?
« Reply #12 on: July 20, 2015, 05:26:17 PM »
Keep in mind, that anyone will be able to rent there, not just students.  If you limit it to students, it will be a fair housing violation.

If all you do to advertise is in the student papers, and a sign out front, it will be a fair housing violation.

treat it like a rental anywhere else.  Know you will get a lot of students.  But have a set criteria, for all applicants.


Megma

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Re: University student rentals?
« Reply #13 on: July 21, 2015, 07:15:33 AM »
Posting to follow as I am considering university area rental also. Thanks for the tips!
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Travelling Biologist

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Re: University student rentals?
« Reply #14 on: July 22, 2015, 07:21:10 AM »
Thanks, all. Very helpful.

Blindsquirrel

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Re: University student rentals?
« Reply #15 on: July 26, 2015, 06:53:01 PM »
   I had a rental for students. I charged like sin and the house was a dog as an earner and a pain.  Was glad when I sold it. Students are vermin IMO and they should spray for them.
Even a blind squirrel finds a nut once in awhile.

grantmeaname

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Re: University student rentals?
« Reply #16 on: July 27, 2015, 06:53:03 AM »
If all you do to advertise is in the student papers, and a sign out front, it will be a fair housing violation.
Why is that? Isn't advertising with a sign out front something that college students and non-students alike can see?

grantmeaname

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Re: University student rentals?
« Reply #17 on: July 27, 2015, 06:53:45 AM »
Students are vermin IMO and they should spray for them.
Funny, that's how I feel about squirrels.