As a fledgling landlord, you want to own property in an area that has a lot of prospective renters. When it comes to rental markets, it’s hard to find a community with more people looking to rent than you’ll find near college campuses. With young, eager students looking for places to live, renting out property in college towns can be a thriving business, but all is not hunky-dory, as there are several risks involved when renting out property in college towns. We’ll discuss the benefits and risks to owning and renting out property in these university havens so you know just what to expect. So take out a pencil and start taking notes, landlord school is in session:
Pros of college rental properties
The main benefit to college rental properties is that your property will see an influx in demand in the fall and through the spring. With more young people going to college now than ever before, the demand for housing is high and will only get higher in coming years. This constant demand helps you save on advertising costs, as renters in college towns decide to move to town first and actively seek housing afterward.
With such high demand, the market value of your property will always remain high. In fact, you might actually be able to charge more than market value. There will always be students looking to move out of the dorms into off-campus housing, and if the location and condition of your property are both above average, you can drive the price up and make a nice profit.
Finally, college rentals don’t see as many problems with late rent and evictions because most college students have a steady source of income, either in the form of parents or student loans, footing the bill.
Cons of college rental properties
Before you whip out your checkbook and sign on the dotted line, you’ll want to take some potential drawbacks of renting on college campuses into consideration. The main one con is that college students tend to be reckless and cause damage. Part of that is due to their young age, while another part is based on the fact that a college rental property is a temporary home for the vast majority of tenants. Because students hop from place to place on a yearly basis, they don’t see your property as a home but more of a place to crash. Therefore, they might not treat your property with the respect a long-term tenant would.
College properties also tend to have dead times during late spring and summer as students leave town once school is out. If you aren’t careful with your leases, that means three or four months of vacant properties not collecting revenue. Therefore, be sure to require a 12-month lease on your property, putting the onus on the renter to find a sublet if necessary, or ramp up your marketing efforts during slow seasons to pique the interest of students in summer school or summer vacationers.
Finally, it can be much harder to do background and credit checks for prospective renters because most college students have little to no past history in these matters. Therefore, you are dependent on face-to-face interaction when evaluating prospective tenants, which can be problematic.
Renting out property in a college town can be rewarding, but care is required. You need to keep security deposits high to cover wear and tear, along with crafting airtight leases. That means putting in clauses preventing things, like paintball guns for example, that might seem silly on the surface. But if you cover yourself legally and give yourself a cushion against damages, you can thrive in the college market.
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