Portland is a beacon for higher education. The city plays host to several large campuses, including the University of Portland in the St. Johns neighborhood, Portland State University, Reed College, Multnomah University, and Warner Pacific, to name a few. There are also campuses scattered throughout the metro area. George Fox University has called Newberg home for more than 100 years. The same is true for Pacific University in Forest Grove and Linfield University in McMinnville. Not far to the east is Mt. Hood Community College, which now enrolls 27,000 students every year. Together, these institutions host tens of thousands of students every year, and every one of them needs a place to live. This built-in demand makes the student market potentially lucrative for real estate investors. However, there are a few crucial things property managers should keep in mind when renting to college students.
What Do Students Want From their Housing?
As a group, college students have unique needs that other renters don’t always share. As a landlord, you’ll want to keep these needs in mind while marketing your property to prospective tenants.
- Proximity to Campus: The typical student spends a LOT of time on campus. They might also have long breaks between classes on any given day. If they can get home in just a few minutes to study or grab a bite to eat before returning for their next class, it’s a win. That means the closer your home is to campus, the more attractive your rental will be.
- Walkability & Access to Public Transportation: Many college students don’t own a car. That means amenities like grocery stores within walking distance and access to public transportation will be very attractive.
- Affordability: On-campus housing is expensive. During the 2017-2018 school year, students at public universities spend an average of $10,800 for room and board. Private colleges and universities are even more expensive. During the same period, those students spent an average of $12,200. That means living off-campus can add up to significant savings.
- Safety: Many students will be living on their own for the very first time. As a result, they’ll want to live in a secure home located in a safe neighborhood. Worried parents who may live far away will also appreciate this important amenity.
If your property can provide these amenities, you’ll probably have a line of college students waiting to rent your home before school starts every year. But is renting to college students worth it? Here are a few reasons why it absolutely is.
The Pros of Renting to College Students
Some owners might be hesitant about renting to college students for reasons we’ll address later on. However, serving this specific group comes with a lot of benefits.
High and Stable Demand
The average college brings thousands of new students through its doors every year. What’s more, total enrollment almost always exceeds the available on-campus housing. That means when you rent to students, you’ll have a fresh crop of new tenants coming through every fall. And unlike resort towns or other niche rental markets, student housing needs are also relatively stable. In fact, college enrollment often increases during bad economic times. This all adds up to low vacancy rates and reduced marketing costs, which is every landlord’s dream scenario.
Student tenants are unique because they often split rent with roommates. As a result, landlords can set their rent on a per room basis, rather than the entire property. For example, a three-bedroom home might rent for $2,000/month to a family. But, three roommates could be perfectly happy spending $750/month for their own rooms. When renting to students, you could earn $2,250/ month on this imaginary property compared to the $2,000/month you charged the family. Landlords who rent to students also benefit because their properties compete with on-campus housing prices. A rent payment of $750 sounds pretty great to a student who would otherwise pay $1,300 or $1,400 per month for on-campus room and board.
Lower Marketing Costs
Student housing also typically requires less marketing than non-student housing. Most universities have a robust word-of-mouth network for rental homes. You may also be able to take advantage of campus communications channels like online bulletin boards or student resource outlets.
Lower Upgrade Costs
Most students look for a clean, comfortable place to eat, study, and sleep. They’ll gladly save a little money and forego fancy appointments like granite countertops or hardwood floors. This means property owners don’t have to make costly upgrades to keep up with the competition in the general rental market. As long as your home is clean and provides the necessities of living, like electricity and hot and cold running water, you’ll likely find a college student who will happily live there.
The Cons of Renting to College Students
These benefits do come with a few downsides. However, property owners can mitigate most of these shortcomings by focusing on a few property management best practices.
Limited Rental Histories
Most property owners use a potential tenant’s rental history as a tool to judge their trustworthiness. After all, past behavior is a good indicator of future results. Unfortunately, most college students won’t have a rental history to look at because this will likely be their first time living independently. To address this problem, most property managers require a co-signer (usually a parent) who’s willing to assume the financial liability if the student doesn’t pay their rent. With this added protection in place, landlords can rent to students with peace of mind.
Increased Wear and Tear
While raging college parties are (mostly) stereotypical student behavior, landlords should expect more wear and tear on their property. Because of their relative immaturity, students may be more careless, leading to stained carpets or holes in the wall. Students may also be less likely to report run-of-the-mill maintenance issues that could lead to more significant damage. Perhaps most important, your property will have a higher number of tenants running through it over shorter periods, which will likely lead to increased maintenance costs over the home’s life. Property owners can address this issue by charging the maximum security deposit allowable under local law. They should also conduct walkthroughs with each tenant to carefully outline expectations about how they will treat the property.
The biggest downside of renting to students is the frequent turnover. Most tenants will likely only want to live in the property during the school year, so they may be more likely to sign a rental agreement over a longer-term lease. This could leave the property vacant during the summer months when fewer students are on campus. Property owners can anticipate these turnover issues and offer perks for referring new tenants. Consider also offering rent discounts during the summer months or finding short-term renters to fill vacancies. College campuses are busy places. Between professors, students, visiting faculty, and other staff, there will always be someone looking for a good place to live.
Recommendations for Success
If you’re interested in giving the student rental market a try, there are a few crucial steps to take to ensure success. First, consider your property. If this is your family home, turning it over to students may not be the right choice. In contrast, if your home is purely an investment vehicle, you can probably earn a higher return by renting to students. Second, create a strong lease that everyone in the home signs. You may also want to include specific provisions like noise regulations and the number of allowed guests to target the unique challenges that come with renting to students. Then, review the lease with every person living in the house — including their co-signers if necessary — to ensure everyone is on the same page. Finally, you’ll want to manage the property actively. This means scheduling regular walkthroughs and inspections, sending rent payment reminders, and monitoring possible complaints from neighbors. Student housing is not conducive with an absentee property manager.
If you’re considering turning your rental property into student housing, Rent Portland Homes by Darla Andrew can help. We’ll screen potential tenants, draw up a solid lease or rental agreement, collect rent every month, and help you find new tenants when the time arises. More importantly, we’ll actively manage your home to ensure it’s well cared for and returning revenue over the long term. By working together, we can help students prepare for their futures while maximizing your return on investment. If you’d like to learn more, contact Darla Andrew directly at (503) 515-3170 or fill out the contact form on our website.