One of the most lucrative properties you can invest in as a landlord are student accommodations. Rental properties located near universities can bring in a steady stream of passive income, but it’s not without its difficulties.
Student tenants are often labeled as high-risk renters. Most of these twenty-something-year-olds have left their nests for the first time, which means they’re probably inexperienced when it comes to the responsibilities of tenancy — including the legal aspects of renting. They’re less likely to take care of the property as other renters would. And since most students have zero credit history and lack a substantial income to pay for their utility bills, safety deposit, and more, they often live with a roommate or two to offset some of the expenses.
But, regardless of who you lease your property to, the trick to maximizing your real estate investment lies in proper tenant management. Student tenants can offer an excellent return on investment (ROI) — the minor headaches will be worth it.
Marketing Your Property to Students
Off-campus rental properties are in high demand, which means that you will have to compete with other landlords and property managers to attract the most responsible student renters to your property. It’s important to first conduct thorough market research to determine the average rental prices in the area — although charging little might bring in more tenants, this also prevents you from maximizing your property investment.
It is typical for landlords to offer student renters perks such as a rent-free month or home improvements. Find out what others are offering so that you can implement the most appropriate strategy in terms of marketing your property. In general, students will start looking for accommodations as early as January, since the academic year typically begins in August to September.
Here are some tips on marketing your property to student renters:
#1 Sell them a lifestyle
Student renters aren’t just looking for a place to live — they’re looking for a property that suits their lifestyles, too. When preparing your property, it pays to modernize your property and marketing approach, whether that’s by offering a 360-degree virtual reality (VR) tour or by creating compelling content such as video walkthroughs of the property. You should also consider dedicating a section of your website to amenities — highlight your fitness center, take pictures of your pool, and get active on Instagram. Let your potential tenants see what it would be like to live in your property.
#2 Market on social media
The most effective way to market your property to students is through social media. The average university student is between 18 to 24 years old, which means that they belong to Generation Z. Their generation has been known for spending as much as three hours per day on social media networks especially Snapchat, Instagram, and YouTube. Use this to your advantage and reach your potential renters where they usually are.
Offer Flexible Terms
Remember, you’re leasing to young adults who have very little savings and packed schedules. If you want to lease your property to students, avoid placing unrealistic demands on your renters. Be flexible with your lease agreements, such as allowing six- to twelve-month terms. Most students will be reluctant to sign a year-long lease since their finances are unpredictable. It’s also possible that they’re simply waiting for on-campus accommodation to be available. Be open to working out a compromise.
Also, don’t include impractical tasks in your agreement. Even if you include it, it’s still unlikely that they’ll follow it. Student tenants will find it difficult to keep up with their landlord’s demands, especially if it’s time-consuming. Your tenants will be spending most of their time on campus and at work, which means they will have no time to mow the lawn, water your plants, and so on.
When screening potential student renters, you should handle the process the same way that you would with any other applicant. This means conducting a thorough check on their financial history, credit score, etc. Since individuals in the 18-24 age range aren’t likely to have a solid credit history, you can assess their financial capability through other ways, such as their employment status. Student tenants who have been employed for long periods may indicate that they are financially responsible, making them more qualified.
You may also consider requiring a co-signer should the tenant lack the income to rent the unit by themselves. Co-signers will be legally liable if the student tenant fails to pay their rent. In some cases, landlords include a parent or relative as a co-tenant under the same lease. However, in case the student breaches the lease agreement, landlords will have to evict both the tenant and co-tenant.
Set Rules on “Party Time”
It’s a stereotype that college students love to party, and while this may not be 100% true, as a landlord, you should put your best interests at the forefront. This means making certain rules about loud noises, guests, and other possible disruptions, clear in the lease agreement. Make sure that the contract explicitly states these rules — or else, you might end up with a trashed apartment or unit.
This is especially important if you’re leasing a multi-family property to several kinds of tenants such as seniors and families. You do not want to get an angry phone call at 3 A.M. from an eighty-year-old tenant complaining about loud music from the student tenant’s unit. This could deter your other tenants from renewing their lease.
Student tenants, especially if they’re first-time renters, will be inexperienced. They will be completely oblivious to their day-to-day responsibilities, which means you have to educate them about everything from the leasing process to property upkeep. You should also ensure that they know what to do during emergencies. If your property management firm provides an online tenant portal, be sure to teach the student renter how to use it.
Even after the student has moved in, you should still check in with them often to remind them of their responsibilities. Just don’t overdo it — let your student tenants enjoy their newfound freedom! The last thing you want to do is micromanage.
Students may be considered riskier than other tenants, but with the right approach, they can bring you a steady stream of income. If you’re looking for professionals who are experts at managing student tenants, get in touch with Luxury Property Care.