Insider’s Guide to Renting to College Students
By Lynn Kreher
Renting to young Gen Z college students, in particular, comes with uncomfortable liabilities that most property owners don’t want to manage. In fact, when asked about the desirability of renting to college students, most property owners negatively reacted with common responses that they didn’t want to take it on. However, in the East Bay where major universities like UC Berkeley and St. Mary’s College are located, it’s part of the fabricate of the rental industry. Trying to avoid renting to college students in some areas like Berkeley are next to impossible. So, the old saying, "if you can’t beat ‘em join ‘em” applies, but with some strategic insights to avoid trouble.
The biggest concern is the transient nature of this population. Most college students move to the area specifically to go to school. They may be in their late teens or early 20s and not self-sufficient enough to either afford rent or depend on scholarships, government grants or parents to pay the bills. Students may move back and forth between campus and their parent’s homes to save money during breaks and vacations, and then return. As a result, students may rent for nine months to a year and then leave, which makes the market unstable in this regard and leaves gaps in rental payments that make it less profitable.
Now couple this issue with the reality that some young people are not responsible yet. They may not realize or care about the value of your properties. They may host parties. They may break things without regard to the expense simply from being young and disconnected from such realities. They may become a nuisance to their neighbors, which could drive stable renters out of the building.
Thus, many property owners don’t see the value in this demographic; however, college students still need places to live, which leaves a high demand from this market segment. “There are pros and cons to renting to college students,” said Adam Hamilton, CEO, REI Hub. “On the positive side, if you have a rental unit near a college campus, you will typically have very little difficulty finding renters. Even if the students you are renting to all decide to move out at the end of their leases, chances are the word will get out that your unit will soon be available, or at least new students will quickly find your unit online. On the negative side, sometimes college students can be a bit more messy, disruptive or even destructive.”
BALANCING ACT
The real question becomes, how do you create a successful renting environment where your properties are profitable while students’ needs get accommodated? Following some specific guidelines will help mitigate liabilities and create a win-win business model.
“Personally, I don't rent to college students because their frequent moves make it hard to maintain stability in my rentals,” said David Flanders, owner and founder of HomeVisors Collective. “For property owners who do, I recommend shorter lease terms and requiring cosigners to manage the risks of renting to such a transient demographic. While students can be a good niche near campuses, the added wear and tear and high turnover require a lot of extra effort. During breaks, I'd suggest filling vacant units with professionals or families who tend to stay longer. Renting to college students can work but only if you have solid systems to handle the constant changes.”
Here are some important tips to rent to college students to ensure your properties don’t suffer:
Parents Co-Sign Leases and Run Credit Checks on those Parents: Make sure parents know rent
isn’t satisfied by the individual; it’s only paid when the full (total) payment is collected. Don’t lease to groups that can’t give you the deposit immediately. If they say they need another week or need to get their previous deposit, that’s a sign of potential issues. Rent to the group that is ready to sign and ready to pay the deposit.
Ask About Their Grades and Goals like a Job Interview: Sit down with each student and find out a little about each person. What are their grades like? What are their long-term intentions in regards to living in your complex during their education? Ask them what they value and even their life skills. You will find the answers simply by asking and listening.
Be Direct, Firm and Clear About Rules and Expectations: You can have the rules listed (like rules of the pool) and expressly state rent collections, utilities payments, and any special requirements you want to inform them about. Don’t waver in your clarity and show no exceptions for bad behavior.
Be More Selective About the Students: Choose to focus on specific groups and types of degrees. A graduate or PhD student is likely more serious about his or her education. It takes good grades and hard work to be accepted into master’s and post-doctorate programs, so why not focus on those individuals who you know are more likely to be responsible?
As noted, student renters can create trepidation among property owners, but if done right, this segment of the population could become a great renter pool to draw from. Some property owners actively choose to rent to this demographic and have made a solid business out of it.
This story is from Rental Housing Magazine produced by the East Bay Rental Housing Association. Author Lynn Kreher is a Bay Area writer.