Recently, we have been talking about all the affordable and fun college towns dotting the country. With one school season coming to a close and the summer looming ahead, it is time for many landlords to turn over vacant properties and get ready for the busy renting season ahead. If you own rentals in a college town, you may wonder if renting to college students is a wise choice. Renting to college students can be a successful way to fill vacancies and keep a steady flow of rent payments coming in, but it does take a little extra work up front to handle successfully.
If you are considering renting to college students, check out these useful tips in our guide to renting to college students.
Start By Understanding The Risks
The first thing you need to do is understand the specific risks of renting to a college student. When you understand the risks, you can better understand how to mitigate them.
While the idea of college students living in your rental could conjure up images of wild parties and holes in walls, there are a variety of both risks and benefits that come to renting to students. Common risks involved with renting to college students include:
- Shorter leases when students don’t want to be locked in long-term
- Lack of credit history
- Issues with rent being paid on time by students who are living on their own for the first time
- Potential for parties and other destructive behavior
Although there are horror stories from renting to college students, the reality is that there are also stories of renting to students working out just fine. The biggest determining factor is how you handle the process of renting out the property. You need a detailed plan of action and you need to stick to your word. When done right, renting to college students can provide you with a steady flow of tenants, low upgrade costs, and an influx of interest in your property.
Mitigating Risks & Finding College Student Tenants
Marketing The Property
The first step you need to take is to market your property effectively. We have talked about it in the past, but one of the best ways to find ideal tenants is to have a larger pool of applicants to choose from. You will gain the most interest in your property and the largest number of qualified tenants when you advertise the rental property across the web.
When you are targeting college students, be sure to include high-quality photos and amenities that will interest this specific demographic. For example, if you are within walking distance of the campus or utilities are included, be sure to include this in your listing.
The better information you have in your listing, the easier it is to weed out people who are not interested in the property. Including the rent cost, deposit costs, pet policies, and other important factors will save you from answering the same questions over and over again.
Applications & Screening
When you have a college student interested in your property, be sure to have them go through the same application process as you would anyone. You also should use a tenant screening system that is integrated with their application.
During the application process, asking for a few of the following items will help you weed out irresponsible students:
- Ask for an employer reference
- Ask for a past landlord reference (usually applicable for upperclassmen)
- Ask for proof of how they will pay rent (e.g. a pay stub or bank statement)
Be sure you actually follow up on the references provided. Talking to previous landlords and employers can give you an idea of the responsibility of the college student.
Remember, regardless of who you are screening and who is applying you always need to follow the guidelines laid out in the Fair Housing Act. Make sure you are not discriminating against any protected class and that you stick to the same criteria for filling the rental.*
When screening a college student, one of the biggest issues you will run into is an insufficient credit history and/or a lack of income. This is where you can mitigate the risk through the use of a cosigner.
Often, college students will have a family member who will be contributing to their living costs. If they claim their parent will cover the cost of rent, don’t simply take their word for it. You will want to run their parent through the same screening process and you will need to add their parent to the lease as a cosigner. Adding a cosigner is an excellent way to safely rent to students, as the parent will not want to damage their credit due to non-payment.
Communicating Expectations Clearly
If you do accept a college student as your next tenant, be sure you clearly communicate your expectations and create a solid lease that covers important information. For example, your lease can include a section that dictates that keg parties are not allowed at the rental property, or that overnight guests are not allowed to stay for more than a set number of consecutive days.
Explain the consequences to your new tenant clearly for violating the lease. For example, let them know what fees they will incur if they make late rent payments, what will happen if city violations occur, and other pertinent penalties. The stronger your lease is and the better you lay out your specific guidelines and rules, the better chance you have of a smooth experience.
This is where having a cosigner can mitigate risk even more. When a parent comes to the lease as a cosigner, they will take financial responsibility should the students trash the place, fail to pay rent, or violate the lease.
Reaping The Rewards
While it can be easy to focus on what can go wrong when renting to a college student, the reality is when you properly screen tenants and set up a solid system for protecting yourself from risks, you can wind up reaping the rewards of college renters.
Some of the benefits of renting to college students include:
- Fewer vacancies with improved applicant pool
- Less property upgrade expenses as many college students will be more concerned with affordability and location over expensive upgrades
- Predictable lease lengths that correlate with the school year
- Lower risk of missed payments due to a cosigner or financial funding
DISCLAIMER: TurboTenant, Inc. does not provide legal advice. This material has been prepared for informational purposes only. All users are advised to check all applicable local, state and federal laws and consult legal counsel should questions arise.