If you are looking to buy a property in a college town or investment property, a college student rental offers some advantages. While you can expect a higher turnover of tenants and the costs associated, a college rental property could provide a higher income.
Rental Properties in College Cities
It is very popular to purchase an investment property in college towns because there is always demand. Ideally, the investment property has at least three bedrooms. The more bedrooms, the more tenants, however, there can be additional wear and tear with the number of people.
With college rental properties, you can expect new tenants every year, while this isn’t the case with traditional rental homes. But with college rentals, it is relatively easy to find new tenants when you need them without many of the risks that normal rentals face. It is still recommended that the home buyer performs all their due diligence when buying the property.
We look at the pros and cons of owning a college rental property.
The Pros of College Rentals
If you own a rental property near a university or college, you should find you get consistent demand from college students. This will be more likely to be the case if the college is well regarded, with a lot of students looking for off-campus accommodation. If the college rental is reasonably priced and in a good location, investors shouldn’t have any problems finding students that want to live there. There are college rental properties for sale that will likely be a good investment.
Students or tenants may search for college houses for rent near me when looking for a property to rent.
You should be able to find a better return for your investment with a college rental property. Since the tenants are less likely to stay for more than a year, higher rents can be charged. On top of this, there’s going to be more demand if the home is near the college.
Higher rents are also possible because students are more willing to share. If you have a four-bedroom investment property, this can be rented to more than four students, as some will be happy to share rooms to cut their costs.
When compared to a similar-sized traditional rental property, there might be only one or two people responsible for paying the rent. This might mean they expect a lower rental cost and have more options have over the location of the home. This means that a college rental can offer a better return on investment for the landlord. Ideally, the rental property is located in a highly desirable community.
As a landlord, you may be asking what is a good rent price for a college student? College students may have limited budgets, however, with roommates they might be able to afford a competitive rent.
Immune to Downturns
If the economy hits a downturn and enters recession, it can be more difficult to find a tenant for a rental property, but this is less of a problem with college rentals. In fact, college enrollment actually increases during recession periods, allowing an investment property to continue to be profitable. Tenants may be moving a significant distance, and then the property can be leased virtually.
While other investment properties could suffer increased evictions and the problem of non-paying tenants during a downturn in the economy, college rentals can continue to show high demand.
The Cons of Owning a College Rental Property
Typically, college students are only going to rent for a year at a time. This can lead to having to find new tenants every year, and with only a short amount of time to prepare the college rental property. This can more work for a landlord when renting to college students.
Sometimes students will want to stay on for more than a single year, reducing the landlord’s expenses. Even then, there can still be greater costs when compared with a traditional rental property with a tenant that doesn’t require much from the owner.College Rental Property | What are the 5 Pros and ConsClick To Tweet
For the reasons we’ve previously looked at, there isn’t much time between the previous tenants and the next ones. This means any damage that has been done has to be fixed in a relatively short time.
There is also a greater chance of minor damage being done to the college rental property. This isn’t surprising given that the tenants know they’re not going to be staying in the home for too long.
There is also the likelihood of parties being held that could cause damage. Landlords can try to restrict these risks by adding clauses that prevent large parties but it isn’t guaranteed to help.
On top of this, you have normal wear and tear that you would expect in any rental home. The cost to fix normal wear and tear cannot be taken out of the security deposit either, and if more damage has happened, the deposit isn’t always going to be enough to cover the cost.
Manage Your Investment Property
Ideally, you will either utilize a property management company to take care of maintenance. It is a good idea to utilize a Realtor to avoid any rental scams that exist. A Realtor will help an owner to properly market the college rental property to ensure that it receives maximum exposure.
You will have to decide if you want to allow pets on the property or not, There are pet-friendly rentals, however, most students in college do not have pets.
It is a good idea to safeguard the home and take appropriate safety measures.
When you are looking for an investment property, college town rental property should not be overlooked. They offer a good return on investment even though there is often more work to do, thanks to the higher turnover of tenants. Despite the larger costs that increased turnover creates, it can be more profitable for a landlord thanks to higher rental prices and demand.
Eventually, you may want to sell the property, and it may sell with tenants in place. Try to ensure the tenant’s cooperation so the property shows in its best light.
About the Author
Top Newport Beach Realtor Sharon Paxson has written the real estate article “College Rental Property | What are the 5 Pros and Cons”. With experience since 2005 representing sellers, buyers, and landlords with their real estate transactions, we welcome the opportunity to share our knowledge and expertise and guide you through the home buying or selling process.