SS107: Renting to College Students

Описание: Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing Renting to college students.
Approximately 6% of the U.S Population, about 20 million people, attend U.S colleges and universities. In this episode, Charles discusses some of the benefits and potential drawbacks of investing in student housing.

TALKING POINTS
➡ Back in 2006, my first tenants were college students. Approximately 6% of the U.S Population, about 20 million people, attend U.S colleges and universities. According to Urban.ORG; 79% of the students attending a 2- or 4-year college live off-campus. Renting to college students can be a lucrative endeavor; but as there are benefits renting to people in this niche; there are also drawbacks.
➡ What are the benefits of renting to college students?
o Rental demand
o Higher returns
➡ Similar to Airbnb properties; the landlord is much more hands on with these tenants. These are more of an all-inclusive service; not just a typical apartment.
➡ Before we go to the next point, I want to preface that if your end goal is having an Airbnb rental or renting to college students; underwriting the property as a normal apartment building or rental house is the best method. Then, after you purchase it; your returns will increase after you transition it. This is also much safer; if we go through a deep recession or COVID 2.0; travel will slow or stop and in the example of COVID 2.0; people left their apartments to go home. Yes, most of them probably completed paying their leases since their parents were co-signers but what happens that summer when school is online in August? As the landlord; who ran their numbers as a multifamily rental; you can now rent it as such and cover all of your expenses.
o Lower expectations
o Consistency
➡ What are the risks of renting to college students?
o Property damage
o Turnover rate
o Limited way for screening tenants. College students don’t have much of a track record so there is not much to check, and usually this is their first apartment. This is where requiring co-signers is a must.
o Contract violation
➡ How do you minimize the risks of renting to college students?
o Require a co-signer
o Require a security deposit or move-in fees for shorter rentals
o Require renters’ insurance – if something is damaged in their unit, or more importantly if the tenant or one of their guests is harmed on the property; the renter’s insurance includes personal liability coverage.
o Fully screen all tenants; check:
➡ Job history
➡ Rental history
➡ Credit report
➡ Income
➡ Adverse items
➡ Criminal background
➡ Sex offender status
➡ Prior evictions
o Clearly outline rules and expectations; as I have mentioned before on previous episodes; having a lease cover sheet outlining all of these is a must; especially with college rentals.
➡ How do you attract college students to your rentals?
o Close to campus.
o Walkability
o Affordability
o In-house laundry
o Fast, Free Wi-Fi
o Some people would include electric in the rent and it might be required in a rent by bed situation but; you need to make sure you will not be losing money.
o Lastly, always advertise your rental online with lots of high-quality photos and include the exact distance from your property to the campus of your local campus.

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