If you are a property owner with buildings in a college town or near a prominent college campus, how are you seizing the opportunity to rent to college students?
According to College Board, 44% of college students live off campus and without their parents, so there is a huge financial opportunity to serve a rental market of millions looking for student housing. However, you might have reservations, given that student renters are often first-time renters, and may require more move-in requirements to minimize risk. Yet it is still worth serving this high-demand, low-vacancy market.
We’re here to give you more information regarding what student renters want from housing, pricing for college students, and the pros and cons of renting to college students.
College students differ from the typical renter in their specific needs. A college renter might not necessarily care about your property’s new marble countertops, but appreciate your property’s digital connectivity and security features. Understanding what college students favor in terms of amenities will help you assess how attractive your property is to college renters.
While you’re considering how to price your rental unit, keep in mind that attending college is often expensive, so students are often trying to minimize their living costs. Any ways that you can make your property seen as a value to college renters, and help college renters navigate paying for rent amidst other expenses, will help your property stand out.
Reasonable monthly rent
Limited add-on or HOA fees
Lower upfront move-in costs with Rhino security deposit insurance
Being about to use multiple payment methods as they’re often splitting with roommates
For first-year students or students who have never been away from their parents, on campus housing can feel like a safe way to integrate into campus life. Yet for upperclassmen or non-traditional students, on campus student housing may not be the right fit for their lifestyle. Some students don’t benefit from resident assistants, randomly assigned roommates, quiet hours, and meal plans.
These college students are willing usually to pay a little extra for more freedom and autonomy, or on the contrary, jump at the chance of a rental unit priced below the cost of student housing.
Your property’s pricing may or may not be competitive, depending on the area in which you are renting to students. For example, at a larger university students who choose to live in a single room on campus pay an average monthly housing cost of $2,028, while the median off-campus housing cost is $2,650 — a monthly difference of $622 a month and $7,464 a year. Yet students who aren’t in a big city are more likely to seek out off-campus housing that is priced similarly to on-campus housing. If you know the average cost of on campus dorm living at the campuses in your city, you can price your units accordingly and even charge higher rents or lower rents. Study your specific rental market before pricing your units.
Most students will be spending a majority of their time on campus, and many campuses have costly and inconvenient parking, so off-campus housing’s proximity to their colleges, as well as means to get to and from their colleges, are a huge priority when looking at rental properties. All told, college renters tend to value:
OR guaranteed parking, due to costly parking
Access to public transportation
OR access to nearby campus shuttles
Certain amenities are especially important for college students. Students need high speed internet to study and access online documents. And the easier it is for a group of college students to share a rental property, the better. College renters tend to value these types of amenities:
Internet speed and cell reception – as we just mentioned, students need decent connectivity to access documents online, and virtually attend remote lectures.
Spacious floor plans for multiple renters – and a lot of them like to rent single-family homes or units in smaller apartment buildings.
In-unit laundry – amidst busy class schedules and extracurriculars, students appreciate the ease of using in-unit laundry at all hours of the day/night.
Community engagement initiatives (e.g. virtual or in-person renter gatherings) – college is an especially social setting, so being able to provide social opportunities to college renters is a value-add.
Security and safety measures, such as security cameras or a dedicated doorman – college renters might be hesitant of their protection when off-campus, without the vigilance of campus security measures, so any reassurance you can provide is also a value-add.
The rental market for college students is in high demand. You rarely have to worry about vacancies because colleges accept thousands of new students every year. Yet very few universities provide housing for all four years, meaning students are constantly looking for new places to live. Best of all, even if a student graduates and moves out of town, they often leave their apartments to friends or recommend units by word of mouth. This helps ensure a relatively consistent and frequent turnover.
Younger student renters will likely have a co-signer or guarantor, and that guarantor is likely to be their parents. This means that to protect their own credit, parent signers are incentivized to make sure that their college-aged child’s rent is paid on time. Some financial aid packages also pay rent a full year in advance. Rhino offers guarantor coverage, so accepting Rhino as a guarantor might be especially attractive to students who would prefer to leave their parents out of the renting process.
Most students split rent with multiple roommates, which means you can raise the price of the overall unit while still keeping it affordable. If you charge a three-person family with a single income $2,000 for a four-bedroom unit, you could charge $2,400 to a group of four college students. This works out to $600 per student and more cash in your pocket. Fortune Builders says houses near college towns yield 30-40% higher rents than the same houses a few miles away.
Again, college students are not looking for amenities or nice, updated finishes. They want lower upfront moving costs, proximity to campus, access to public transportation, grocery stores and entertainment, reliable wifi, cell reception and affordable rent. If your rental unit fits some of those requirements, you can put off upgrades, new appliances, and renovations and save tons of money on maintenance costs.
#1 Limited credit or employment history
For many students, college is sometimes the first time they’ve ever rented. First time renters are risky because many can have limited employment history, very few assets, and little credit history or rental history. This makes it essential to have a co-signer or guarantor and a screening process. A guarantor guarantees that a renters rent will be paid on time and in full in order to provide an added layer of protection for you as a landlord.
Noise complaints could become an issue, if students choose to host extracurricular or social events. This could result in visits from the police and even fines. One way to get around these issues is by putting quiet hours into your lease agreement. For example, stipulate in your leases that, between the hours of say 10pm and 9am, renters are to avoid generating noise that can be heard farther than 10 feet from the property, and multiple violations will lead from additional charges in the monthly rent up to eviction.
In summer months students may return to their hometowns leaving apartments empty. You should negotiate lease terms which make it clear that while school is out, rent must be paid. Also be mindful of subletting stipulations in your lease agreements. While students might take issue with a clause prohibiting subletters, instituting such a clause might save you the headache of dealing with a potentially unreliable renter during the summer months.
First time renters may be too inexperienced to understand how to pay rent or utilities on time. Even if parents or financial aid packages give students the right amount of money to pay rent every month, they might miss a payment. Renting to college students who are renting for the first time could unintentionally lead to unpaid utility bills, property damage, maintenance issues, and things which could lower the value of your property due to neglect. This is why it is essential to require security deposit or offer security deposit insurance, a clear lease agreement that outlines whose responsibility it is to pay utilities, and a detailed screening process.
As they say in the business world, high risk is often accompanied with high rewards. Property owners need to protect their investment properties against the risk of property damage and default on payments, but the off campus housing rental market’s high-demand with higher rents and minimal renovation costs could prove financially beneficial. If you make your lease terms clear and have a strong screening process in place it could be a huge opportunity. Weigh the risks against the benefits, and see if college rentals are right for your property based on its location to nearby campuses.