A Guide to Student Rental Property Management

If your residential property management company is located near a college or university, it’s likely that the prospect of renting to students will come up eventually. As a property manager, the idea of renting to college students can seem daunting as the risk of getting your property back in worse shape than before seems more likely. However, equipped with the necessary knowledge and precaution, renting to students can be a beneficial, lucrative niche for your rental property management business.

The student rental market is growing rapidly throughout North America. Between 2003 and 2013, postsecondary enrollment increased 20 percent, from 16.9 million to 20.4 million. As enrollment continues to grow, demand for student housing in the surrounding communities naturally increases as well.

Just from 2011 to 2012, annual student housing transaction activity has grown from$2.5 billion to almost $4 billion. Not only is it a lucrative market, but student housing is also in high demand. In the U.S. alone American Campus Communities (ACC), the nation’s largest developer, owner and manager of student housing communities in the U.S., reported 96.5% occupancy in 2013 compared to 95.6% residential occupancy reported by Reis, a commercial real estate data compiler.

In addition to the high-profit opportunity, your rental property management company will need to invest little in advertising for properties around college campuses. Many vacancies can be quickly filled with open mouth, and students often scour free classified websites such as Craigslist. Students are typically locked into their school year classes and activities, so students don’t often break leases. Turnover is common at the end of the school year but you won’t expect a lack of applicants for vacancies, as there’s always a new incoming class of students looking for off-campus housing.

Although seemingly risky, renting to students could potentially be very lucrative for your rental property management company. Below are some things to consider to help you get started.

“Student-Proof” the Property

As it goes with any resident, student renters expect certain things from their home so it’s important to consider their needs when preparing to rent to them. Some amenities students prioritize include:

• Location – Students don’t only want their rental property to be near the college or university they’re attending. As many of them may not bring their cars to school, students want to be in proximity to supermarkets, coffee shops, libraries, restaurants and bars, etc. When thinking about renting to students, think about everything that is in its close vicinity and be sure to advertise it.
• Functional Layout – When renting to students, you’ll likely rent one property to two or three individuals. Because of this, it’s important that your rental property has a functional layout, with a common living room for gathering and enough private rooms and bathrooms for the residents to preserve their privacy.
• Laundry – From going out with friends to working out to pulling all-nighters, college students are always changing gears and their attire usually follows form. Students will often insist on moving into a property with on-site laundry facilities. For a house, one set of washer and dryer should suffice. If it’s a multi-unit building, you should consider having at least 2-3 sets to accommodate for all of your residents.

Cater Lease to College Students

When setting up a lease for a student resident, make sure you cater it to a college student’s requirements and housing needs while protecting yourself financially. As a residential property management company, it is important to have high expectations and make those expectations clear in the lease. In addition, the term of the student lease should match the college’s academic schedule – typically August to July. Your residential property management company may want to even create leases from August-May since many students return home over the summer break.

Be sure the lease clearly states the move-in and move-out dates so the student resident can plan accordingly around their school schedule. You’ll need a reasonable amount of time after the student resident moves out to evaluate any damages, make necessary repairs, and clean as needed before the next student residents move in.

Protect Yourself Financially

As it goes with any type of resident, there are always associated risks that come with rental property management. Unfortunately, renting to students may increase some of those risks as they are often inexperienced with renting and may be less mature than an older professional or family.

Although potentially risky, renting to students can be an easy transaction if you put proper precautions in place, such as:

• Charge a Higher Security Deposit – Charging a higher security deposit to students can create a safety net in case of troubles down the road. With a large security deposit, you can cover any unpaid rent, if necessary, and repair any damages that may have been incurred over the rental period. Once you’re done repairing the damages, it’s important you return any unused portions of the deposit to the student resident with an itemized list of deductions.
• Require a Cosigner – Since students generally have a short or even non-existent rental history, it’s a logical choice for your rental property management company to require a cosigner on the lease. This cosigner should be an adult – a parent or other relative – with an established credit history. Be sure to clearly note in the lease that, if the student fails to pay for rent and/or damages, the cosigner will be legally responsible to reimburse the property management company.
• Include all residents on the lease – Since many students choose to live with friends to help split the cost of the rental property, it’s important to adapt your lease agreement so that roommates can be listed. It should be clear on the lease that each resident is responsible for the full rent amount. This creates a safety net for your rental property management company in case one of the residents decides to move out suddenly, the other renters are still responsible for the full rent amount.

Equipped with the proper knowledge and precautions in place, renting to students can be very beneficial to any residential property management company. Need help getting started? ICC^® Property Management has extensive experience in high-rise, low-rise, and commercial property management. Give us a call today and let us help get your rental properties ready for student renting.