Should I Rent to College Students? - The Pros and Cons

College students tend to begin their college years living in the dorms, which can be overly crowded and noisy. For some, it's easier to spend their waking hours at coffee shops and parks instead of their "home". This is why many will seek alternative arrangements, like renting apartments with others, which is why college real estate is often a smart investment.

If you are actively investing in rentals near a university you may have had to make a decision about renting to college students. It may have been a difficult decision, and you may have been left wondering if you made the right choice. To help you make this decision in the future, we thought we would analyze the pros and cons of renting to college students.

The Benefits of Renting to College Students

First, keep in mind that not every school is Animal House and toga parties. Often college gets the reputation for parties and reckless behavior. With this reputation you might be afraid of letting college students live in your home. However, it is important to remember that not every student is a party animal and not every University is a party school. In fact, in recent years various social forces have pushed students to focus on their studies to a greater extent. For example, the cost of college has risen drastically and the competition for new graduates in the marketplace has grown more and more fierce.

This has forced students to work harder in class and take on extra internships and jobs. With a focus on these activities there is less time for parties and many students spend a great amount of time away from their residence. Ultimately, this can mean that a property will be lived in less and returned in better condition. So how can you know for sure? Ask for a resume. Here you will find the student's work history and on-campus involvement. These can be excellent indicators of the students responsibility or lack thereof.

Second, renting to students can be a good idea because parents, rather than students, are often responsible for the terms of the lease. You can also ask the parents to co-sign. These factors cut down on risks tremendously, offer a direct point of contact, and reduces the likelihood of broken lease agreements.

Third, student renters tend to be first-time renters, and this means they are often cautious and take care of their living spaces. They're unlikely to hammer things into walls or try to make repairs that only lead to worse problems. They are also confident in picking up the phone to ask for some assistance. These behaviors result in better results for you and your investment.

Fourth, and finally, college students don't necessarily expect to live in luxury. They will often take a property as it is just as long as you have a/c, working electricity, and the property isn't totally trashed. You are also unlikely to get calls from them complaining about minor aesthetic issues. For the most part they just want a place to live that is not mom and dad's or the dorms, beyond that they just expect to get a fair product for what they are paying. If you price your property fairly you shouldn't be concerned with ridiculous requests.

The Risks of Renting to College Students

No tenant is ever perfect (although that would be nice wouldn't it?) and college students are no exception. When working with this population one of the most obvious issues is the high turnover rate that results from the structure of a school year. They might leave every May, and after they graduate it is very likely they will leave. The flip side of this, however, is that there is a very good chance they will have younger friends who are interested in renting. So while your current residents might be leaving, there is a good chance that, if you treated them well, their friends will be calling you daily until you sign a lease with them. You could have tenants flow through for years!

Second, while it is a plus that a student will not attempt to do repairs, it is also true that they might call you about issues that could be easily fixed. You can think of these as "did you turn it off and turn it back on" problems. For example, you might have a college student call you to complain about how their kitchen has no electricity. As you shake your head, you'll have to explain what a breaker box is and possibly go out to flip a switch for them.

Finally, it is impossible to say whether or not you will have excellent renters each time, which is really true for all tenants. Therefore, you'll need to plan ahead for possible issues that might arise. For instance, what will you do if the police are called for a loud party and you hear that a lot of damage has been done? What will you do if two of the roommates don't get along and one wants to break the lease and move out...will you cut a deal with them? These are just some of the problems for which you will need to plan.

In the end, you will need to take a variety of factors into account when deciding whether or not to rent to college students. Think about what the colleges in your area are like, analyze these specific students, and evaluate what risks you are taking with your final decision. Sure, you can turn down a college student in the hopes of avoiding some of the aforementioned downsides, but what if you sit on market for months and end up finding a tenant who gives you problems anyway?