If your rental property is located in a college town or near a university campus, renting to college students can be very profitable. Whether you already own a unit within walking distance of academic buildings or you’re looking for a great area to purchase your next property, there are some advantages, disadvantages, and risks you should be aware of when renting to college students.
Can You Refuse to Rent to College Students?
The simple answer is no. Refusing to rent to students would be considered discrimination, especially since many students are between the ages of 17 to 25 and the Fair Housing Act prohibits discrimination based on age. It’s important to avoid stereotyping potential tenants since not all college students are young adults. It’s common for older adults, parents, and emancipated children to be college students as well. Several states like California prohibit discrimination based on an arbitrary characteristic, which could include student status.
When denying a rental application, you must adhere to the FHA’s guidelines. Only a low credit score, insufficient income, and other legal reasons can be used to justify denying a tenant’s application. If you deny someone’s application, be prepared to send a letter detailing why. Also, some cities have student housing ordinances that control the location and conditions for renting to college students, so do your research and make sure you’re compliant with state and local laws.
Pros and Cons of Renting to Students
Pros
Along with bringing in consistent revenue, there are several advantages of renting to college students to keep in mind. Several advantages include:
High demand for housing
The demand for housing near a college or university campus is usually very high. Since new students attend the school each year, there is usually a steady demand for rentals, which could lead to fewer vacancies. Professors and staff might be interested in renting with you as well.
Competitive market
Rental properties close to campus are typically priced higher because they are compared to the cost of room and board. Although you might be able to charge more in a college town compared to another city, remember to charge appropriately based on similar units in your area. The rent price should be enough to cover expenses, but still be affordable enough for college students.
Save time and money on upgrades
Since most students are looking for an affordable, temporary place to live for a few semesters, they are less likely to seek out popular upgrades that would be dealbreakers for other tenants. Although routine upkeep and necessary renovations are important, you won’t have to worry as much about installing a chic kitchen backsplash and modern light fixtures just to stay competitive and attract tenants.
Spend less on marketing
The location of your rental property will be a major selling point. You won’t have to spend as much on marketing since college areas typically have abundant amenities that naturally attract college students and other renters. College towns are usually laden with restaurants, shops, bars, and special events, so if you’re near these areas of interest, it’s likely a large pool of potential tenants will want to rent with you. Students will also tell their friends about good places for housing nearby and word-of-mouth is one of the best ways to advertise a rental property.
Advance rent payments
Some student renters (or their parents and/or family members) will pay rent a semester or year in advance, so you won’t have to worry about tenants paying rent late. Along with parents and family members paying for rent, a student renter might use scholarship money to cover that expense.
Cons
Here are some important risks to consider when renting to college students:
Little to no rental history
Students are less likely to have employment, rental, or credit history. It’s also probably their first time renting and living on their own. This will make it harder to determine if a student renter meets standard screening criteria.
Property damage
Since it’s probably their first time living independently, students won’t have experience handling maintenance. They might ignore or put off addressing a maintenance issue which could develop into a larger problem or property damage. Also, even the most studious students enjoy college parties. College parties might cause damage, so just keep that in mind.
Frequent turnover
Although college students will be in school for a few years, that doesn’t mean they will automatically renew each year. Their housing plans might change each year based on what they can afford and their preferences, so students are less likely to sign a lease that’s longer than a year. A student might want to rent with new roommates or best friends, travel abroad, or live on campus as a resident assistant to save money. It might also be harder to fill vacancies during the summer since many students travel, return home, or get internships during that time. To solve this issue, you can consider subletting, but some landlords like to avoid using that type of lease.
How to Lower the Risk
There are several steps you can take to successfully rent to college students and mitigate the risks. Some examples include:
Screening Your Tenants
Apartments.com makes it easy to screen tenants, get the information you need, and find a qualified renter fast. Unlike our competitors, who use various third-party resources to collect information, we partner with TransUnion to provide you with screening reports for evictions, credit, and criminal history. Another feature you’ll find only on Apartments.com is support for co-signers, guarantors, and co-applicants. If you need more information to make a decision, you can request supporting documents from potential tenants directly on our platform. Get all the information you need to find the right tenant quickly and easily.
Accept cosigners/guarantors
It’s common for parents and other family members to pay for a student’s rent, so accepting cosigners is a great option. Since college students might not have rental experience, using a cosigner will give you more options in case there is unpaid rent or extensive damage. Knowing a family member is also responsible for their unpaid rent, rent fees, or property damage could cause a student renter to make responsible decisions. Make sure to properly screen all cosigners.
Accept roommates and consider individual leasing
Students often find roommates to afford housing. Although the types of leases you offer are at your discretion, consider individual leasing. Also called renting “by-the-bedroom,” this type of lease doesn’t hold the entire group of roommates responsible for late rent payments. Instead, each person pays their own set amount each month. Similarly, only the roommate who caused damage in their room or terminated their lease early will be held accountable. Roommates are typically jointly responsible for common spaces such as the living room, kitchen, and shared bathrooms. College students gravitate towards individual leases because they don’t have to worry about dealing with an unreliable roommate that might negatively affect their credit or end up paying for damage they didn’t create.
Conduct periodic inspections
Having frequent inspections will allow you to keep an eye out for any minor repairs before they snowball into a bigger problem. Always be sure to provide a notice letter before entering the unit. Also, be sure to complete a move-in walk-through checklist and capture the condition of the unit with photos and videos so you can explain your reasoning if you need to deduct from the security deposit.
Use the lease to address rules and expectations
If you adhere to local and state laws, you can tailor your lease to address and prevent any potential issues. For example, you can include clauses for quiet hours, a pet policy, late fees, and cleaning expectations. Include if the tenants will be responsible for paying for utilities.
You can also set more specific rules such as banning charcoal grills, candles, fireworks, and smoking to prevent damage. Since they’ll probably be a first-time renter, the student may not know how security deposits work or what actions could lead to eviction. Be explicit and discuss the rules before signing the lease. Some landlords will even provide a printed rule sheet in their welcome package.
Require a security deposit and/or move-in fee
Requiring a security deposit will allocate money for any property damage, while move-in fees typically cover costs for turnover such as cleaning, painting, and any touch-ups before the tenant can move in. It’s common for college town landlords to charge both to ensure they have enough funds to complete repairs. Remember to research your local and state laws surrounding deposits and move-in fees.
Advertising Your Rental to Students
Along with word-of-mouth, online listings will be one of the best methods for advertising to college students. Students use the internet for school and entertainment, so they’ll also look online to find places to rent. Some schools will allow landlords to post on campus bulletin boards, print ads in the housing guide, or advertise on the university website or social media pages. If the school decides to be affiliated with your rental property, it could attract more students.
When writing your property description, highlight attributes that college students are looking for. Include the distance from the rental property to campus. Since some students don’t have cars, note the property’s walkability to grocery stores, shops, bus stops, and other points of interest. Mention convenient amenities like a fitness center or washer and dryers. If you offer free Wi-Fi (or include it in the cost of rent), be sure to highlight it since students will likely appreciate having one less bill for a utility they use frequently.
Although renting to college students comes with risk, there are plenty of benefits as well. Allowing cosigners, tailoring your lease, and requiring a security deposit will help prevent those risks. Hopefully, these tips will help you successfully rent to college students.
