Cons of Renting a House to College Students
For all those advantages, renting to college students comes with its downsides, too.
Here’s what you should know before investing in student housing.
1. Higher Risk of Property Damage
Negligence is definitely not limited to student tenants, but with that said, it’s certainly a risk you will want to take into account.
It’s no secret that antics like keg parties, lawn games, and noise complaints are much more prone to happen when 18-22-year-olds are involved. As they learn to live independently for the first time and take care of things for themselves, there will likely be some excessive wear and tear in the process.
If the students are irresponsible with the property, you could end up paying an extensive amount in damage repairs. Not only does this add extra stress to the renting process initially, but it will always be a risk because even once one group of college kids moves out, the same exact demographic could be arriving.
2. High Turnover Rates
Personally, I moved every single year throughout my four years in college, and so did most of my friends. The reality of high turnover is a very real consequence of renting a house to college students.
There are a plethora of reasons why students change their housing plans each year, such as meeting a new friend they want to room with, needing to be closer to a certain part of campus or town, etc.
High turnover rates mean more work for you as the landlord or property manager and a higher risk of vacancies. You have to re-rent the property every single year and potentially do maintenance work like repainting, replacing the flooring, and so on.
Additionally, landlords incur their greatest labor and expenses during tenant turnovers. It takes time and money to clean up the property, advertise it for rent, collect rental applications, run tenant screening reports, sign a new lease agreement, conduct the move-in walk-through, and so forth.
3. Tenant Screening Challenges
As you likely already know, tenant screening is one of the most important functions you can perform as a landlord.
Thorough tenant screening is key to a successful renting strategy and helps prevent unnecessary issues. However, screening college students can prove to be difficult due to the fact that there isn’t much to screen.
If they even have a credit score, it’s probably low, which doesn’t necessarily mean they’ve done anything wrong; it just means they haven’t had the opportunity to build credit yet. They likely have little to no previous rental history, and they don’t expect an impressive income if they do have a job.
Overall, it can be really tough to qualify for college renters. It’s a good thing you can screen their parents instead and require them to sign as co-signers on the lease agreement!
4. Added Risks During Extended Absences
Students almost always travel or go home for winter break, spring break, Thanksgiving, and so forth. This leaves your rental property vacant for prolonged periods of time, making it more vulnerable to break-ins, vandalism, and other issues.
It can also mean frozen pipes during winter break if the tenant leaves the heat off or low to save money while out of town!
5. Poor Communication
College students have never lived on their own before. That means they’ve never had a landlord before and don’t know when to bring issues to the landlord’s attention.
My college townhouse had several types of mold on the ceiling. I now know I should have told the property manager about the mold. Instead, we just ignored it and kept partying.
Don’t assume college students will tell you about property repair issues, mold, pests, or other property problems.
6. Breaching of Lease Agreements
Although you might clearly state that only three people can reside in the house, college students are not always trustworthy. They may squeeze one more person in so they spend less money each month, unbeknownst to you. College students may also ignore your rules regarding noise or large parties. This could affect your relationship with your neighbors and cause damage to the property.
7. Weak Financial Habits
College students haven’t had a chance to build strong financial habits yet. Habits like “pay your bills on time” and “don’t carry a credit card balance over to the next month.”
That means they often budget badly and spend all their money on beer and pizza rather than setting aside what they need to pay their rent.
Good thing you can lock in their parents as co-signers on the lease agreement!
Tips for Renting to College Students Profitably
Still interested in renting to students? Follow these steps to ensure you come out ahead when investing in student housing.
1. Add the Student’s Parent(s) as a Guarantor
Having the student’s parents co-sign the lease agreement is hands down one of the best things you can do to protect yourself in the case of renting a room to college students.
Make sure you screen the parents as if they would be living on the property and that they meet all of your rental requirements. That includes credit reports, criminal reports, eviction history, income verification, and housing payment history!
2. Collect a Higher Security Deposit
When determining how much of a security deposit to charge, you have to be careful not to violate any fair housing laws or state landlord-tenant laws.
However, requiring a higher security deposit commensurate with the risk you are bearing can be another way to protect yourself in the event of excessive damage at the end of the lease.
Our company’s philosophy is NEVER to charge less than one month’s rent, and we’ll even go up to 1.5 or 2 times the monthly rent, depending on the perceived risk of the rental application.
The most important thing to remember regarding screening is to be consistent.
