If you're looking to get into rental real estate investing, buying property in a college town can be a great investment. But there are a few things you should do to set yourself up for success when becoming a college area landlord. Here are a few steps to make sure your rental business starts out on track.
Consider the Pros and Cons.
Renting to the students in a university has advantages and disadvantages. You should think about them carefully before deciding if it's right for you. What are some of these pros and cons?
Higher turnover rate. Most college students move several times during their university career, so you're likely to have to look for new tenants more often than you would with other renters. You may also find that replacing renters during certain parts of the year is harder than in other communities.
Large pool. Because the university attracts new students every year and maintains a large base of established students, you are likely to have a plethora of potential renters to choose from. It's also a pretty stable pool of renters since large colleges tend to be reliable and long-standing parts of the community.
Support personnel. Students aren't going to be the only group of potential clients in the college area. Teachers, administration, support staff, and local businesses can all provide more people who may be looking to rent your home.
Home maintenance. If you do rent to students, you may find that your house is not kept in as good condition as more mature or family renters might do. This means some risk of damage to the property, replacement costs, cleaning bills, or the like. If you're sentimental about the house or you have little buffer in your budget, this may not be a risk you want to take.
Find Your Pool.
Once you've assessed the ups and downs of renting to college students, it's time to determine who you want your pool of renters to be. If you're concerned with the condition of the home or a higher turnover rate, focus your marketing efforts on the non-student pools -- such as surrounding businesses, young families, and school staff. If you feel that you can be comfortable with some added risk and time investment, though, you may find that renting to students will bring in a higher profit.
Choose Between Individuals and Groups.
If you choose to rent a house to students, you're likely to be renting to more than one person at a time. You will need to decide if you want to sign a contract with one person (and possibly his or her parent) who will be responsible for the entire rent or if you will have each student sign a lease for their portion of the rent. Working with individuals can mean less risk of losing rent if someone leaves, but it may mean more work for you.
Know the Cycle.
School rental properties tend to be the most busy during the late summer and again before the start of each semester. Make sure you build your calendar around this late summer target date to be ready to rent the unit. Prepare flyers and see if you can place them in local businesses or student hangouts. You may also be able to advertise for free in the university itself -- either in student areas or in staff sections. Hold an open house or two on the weekends before school begins to generate buzz about your property.
By following these steps, you can decide if becoming a college area landlord is right for you and how you want to direct your efforts. And whether you choose to market to students or to the myriad of other people involved in a college town, you will surely find a positive new income stream for years to come. Work with a real estate agent for help finding the ideal rental property.