There are many advantages provided to investors who own rental properties in a college town. As long as there is a college or university accepting students, there will always be people looking for rental homes. And, as these students move on and graduate, there will always be new sets of renters available. But what makes a property attractive to college students? And are there potential downfalls to renting to this group? Sweyer Property Management, with decades of experience managing rental properties to students attending UNCW and CFCC, has some tips for those renting to college students in the greater Wilmington area.
What are College Students Looking for in a Rental?
One of the main things students look at in a rental property is its proximity to campus – will they be able to walk or bike to class? Is it convenient to public transportation? Many students do not have cars while away at school or do not have campus parking passes, so if you have a property that is close to campus, it is very likely you'll have students interested in renting your home. Students are also looking for properties that make them feel safe. Simple things like sturdy, working locks on all doors and windows and ample outdoor lighting can be a selling point for students and the parents who are helping them choose a property.
Another big factor for students is, of course, affordability. Though many students have parents or financial aid assisting them with living costs, not all do. If other properties near your investment home are renting to students, see what their rental rates are. If you set your rate way above that of similar rentals, students will typically pass over yours for the more affordable option. That being said, student renters usually aren't too concerned with the upgrades and frills that families and young professionals may be. When renting to students, the main concerns likely won't be granite countertops, stainless steel appliances and solid-surface flooring, but rather a place that has everything in good working order and fits their needs at the time.
Pros and Cons of Renting to Students
Just as with everything, there are pros and cons of renting to students. Allowing college students to rent your home will be a decision you as an investor have to make based on your financial needs and the type of property you have. Here are a few things to consider from both sides of the aisle:
Pros:
- In a college town, there will always be a high demand for student properties
- High demand allows property owners to command increased rental rates, especially when these costs are being split between 2-3 roommates
- Renting to students may not require a lot of marketing - students are actively searching for properties close to campus that fit their needs and will find them on their own or through word of mouth
- Payments are often coming from a reliable third party – when applicable, cosigners are on the hook for rent alongside with the students and will ensure it gets paid
- You don't have to spend as much money on expensive cosmetic upgrades – students usually just want a safe, convenient place to live and do their school work
Cons:
- You'll have guaranteed turnover - students tend to move a lot, probably every year, so you’ll have to prepare the property for a new group and fix normal (and sometimes excessive) wear-and-tear annually
- Students can sometimes be unreliable - remember, this is probably their first time living on their own and renting, so they likely have no experience with general home maintenance and may be forgetful when it comes to making payments on time and being responsive to communication at the onset of their tenancy
- They can be a source of noise complaints or HOA violations - students like to have fun, of course, and gather with friends. On occasion, this can get out of hand and lead to issues with neighbors
- Just as with most things in Wilmington, the student leasing window is also seasonal. Students will be looking for properties from about May – August. After that, the majority are settled in for the year. If your property isn't ready and available during this time period, you'll likely have missed out on a large portion the student demographic looking for off-campus housing
I've Decided to Rent to Students - What's Next?
If you do decide to rent to students, it is imperative that you are very clear regarding all the terms of the lease and the consequences if the lease terms are broken. If the property they’re renting is in an HOA, be sure to provide them with a copy of the rules and require that they carefully read them and initial or sign each page. Another way to ensure some peace of mind is to always require cosigners for student renters. By and large, students do not have much income, credit or rental history – you need someone who does have these things to ensure there is a party responsible for unpaid rent and damages should the terms of the lease not be adhered to. Cosigners also often do a good job of ensuring that their student follows the rules and upholds their end of the lease. You may also require a higher security deposit for students - this money must be held in a trust account for the duration of the tenancy but will be available to you in the event excessive damages are discovered when the renters move out. Remember, you cannot require a deposit higher than two times the monthly rental rate in NC.
Perhaps the best thing you can do when renting to groups of students, however, is hiring a professional property manager. Professionals have lots of experience dealing with student renters. They will be able to better enforce the rules and overall help guide these students through their first renting experience. When dealing with groups of students and groups of cosigners, things can sometimes get confusing - professional property managers have dealt with this before and are well-equipped at making sure each member of a group understands their responsibilities and that everyone receives all pertinent communication.
If you have questions about renting your investment property to students, reach out to the experts at Sweyer Property Management for guidance.