Purchasing rental property in a college town can be a lucrative investment. Landlords near colleges and universities benefit from high demand, stable rental markets, and an ample pool of would-be tenants.
However, renting to students can also have downsides — such as high turnover, poor treatment of the property, and late rent payments by young people with little financial management experience.
What are some steps you can take as you rent to college students to choose tenants who meet their financial obligations, follow the rules and respect your property?
Know the Risks
If you have vacancies, renting to college students can help fill them quickly. However, renting to young people enrolled in college poses some unique risks — including filling your rental residences during the summer, when students are away.
In addition, some students may create problems for you with excessive partying — resulting in noise complaints to local law enforcement. Most students also have very short credit histories and may not understand the importance of paying bills on time. Being aware of these risks is the first step in addressing them.
Target the Best Tenants
One way to mitigate the risks of owning or managing property in a college town is choosing your renters wisely. The larger your pool of applicants, the more likely you can find ideal tenants. To increase the number of individuals applying, use multiple marketing channels, including online sources, and make your ads as appealing as possible with photos and well-written descriptions.
Once you get prospective tenants in the door, watch for red flags during the application process — including:
- Lack of references
- Resistance to a rental tenant screening
- Past credit problems
- Evasive answers about how many people will live in the residence
Design for Your Audience
Consider adapting your residential spaces for college student needs. Multiple-occupancy residences should have plenty of storage space, such as walk-in closets and external storage areas, when possible. In addition, use durable flooring and other finishes that can stand up to heavy wear from several roommates.
Add Specialized Language to Your Lease
Prepare a separate version of your rental contract that includes specialized language targeting your student tenants. To ensure that the lease fully protects you and your property, work with a real estate attorney.
Your customized lease should address rules for parties and gatherings, rent payment, occupancy limits and any other potential problems that may arise with younger tenants.
Before contracting with a new tenant, be sure to communicate lease terms clearly — emphasizing any important details such as whether parties are permissible and how many guests can be on the property at one time.
Require a Co-Signer
If your prospective tenant is under age 18, you will need a parent or guardian to co-sign the lease. Even for older students, having a parent co-sign is a good idea, because it helps ensure that the rent will be paid.
Many students lack a sufficient credit history to qualify for a lease, and full-time students may not have their own income. Adding a family member who meets your financial screening requirements helps limit your risk.
Conduct a Thorough Tenant Screening Background Check
One of the most important steps you can take when renting to college students — and any co-signers — is conducting thorough background screenings. With a rental tenant screening from an experienced provider, you can immediately filter risky tenants — for example, those with criminal backgrounds or a history of financial mismanagement.
A thorough background screening will provide you with valuable information, including credit history, criminal record, references, education and employment history. Your tenant background screening provider can assist you with ensuring that you follow the requirements of the Fair Housing Act.
Reiterate the Ground Rules
Once your student tenants move in, be sure to stress the rules and expectations. Consider posting a laminated listing of rules within each residence, provide a copy for every roommate, and post the rules on your website and resident online portal. The more readily available you make the rules, the more difficulty tenants will have in claiming a lack of knowledge.
Your posted rules should address topics that apply to students, such as:
- The number of individuals who may live in the residence
- How long guests can stay
- Rules for parties
- Rules for subletting during summer months
Enforce your rules similarly for all your tenants, and consider providing incentives — such as coupons for movies or dinners out — to those who follow the rules.
Tenant Screening Services for Landlords
Global Verification Network serves as a highly experienced provider of tenant credentials — including credit history and criminal background. To learn more or to request a quote and detailed information about our tenant screening services, please contact us.