If your rental property is located near a college, university or trade school, consider renting to students. Setting up a lease agreement for students is different than a typical lease for families or single professionals. Create a lease that caters to a college student’s unique requirements and housing needs, yet protects you against financial loss due to less mature tenants.
Students Are Worth It
Renting to students can be quite lucrative in a college town, as long as you make sure your tenants understand that you have high expectations.
Among the advantages in renting to students is that you’ll do minimal advertising, because vacancies can be quickly filled by word of mouth. Students generally won’t break a lease agreement during the school year because they are locked into classes and activities. Plan on a lot of turnover at the school year end, but you’ll never lack applicants for vacancies.
If your rental is close to campus, you can charge a higher rent for the prime location.
Length of Lease Agreement
The term of a student lease should match the nearby college or university’s traditional schedule—generally September to May. Because many college students return home for the summer, or go elsewhere for internships or travel, it’s hard for them to commit to a 1-year lease.
For students who want to stay in your rental unit through the summer, create a separate summer lease agreement that spans the mid-year months. This will allow you to keep student tenants year round but eliminate the hassle of conforming to a 1-year lease that simply doesn’t work for your target tenants.
Make sure the lease agreement is very clear on move-in and move-out dates so students can plan accordingly to match their school schedule. You’ll need an appropriate amount of time to evaluate damages, make repairs, clean and paint as needed before the next group of student tenants moves in.
Protect Yourself Financially
There are always risks associated with managing a rental property, from non-payment of rent to significant damages to the unit. Renting to students can increase some of those risks.
Because students may not be as mature as single professionals or a head of a family, you’ll want to avoid some common pitfalls with student tenants that can cost you money.
Ensure that Renting to Students Doesn’t Hurt Your Finances
Here are 3 ways you can make sure that renting to students won’t hurt your finances:
1. Charge a higher than normal security deposit.
Because you are taking a greater risk in renting to students, it’s appropriate to charge a substantial deposit to offset them. Use the security deposit to cover any unpaid rent due to broken lease agreements and to repair damages. Plan on returning any unused portions of the security deposit to the tenant with a list of deductions.
2. Insist on a co-signer.
Students generally have a short or non-existent rental history and limited credit, so it’s a wise decision to ask for a co-signer on the lease agreement. Don’t let another student be the co-signer—stick with a parent or older relative. Make sure that the co-signer understands that they are responsible for the rent and cost of damages should the student fail to pay.
3. Include roommates on the lease agreement.
Most students want roommates to share rent and help defray costs, so structure your lease agreement to include roommates. Each lease agreement should be clear that each student tenant is responsible for the full rent amount.
This protects you if one student moves out unexpectedly—the other tenants are still responsible for the full rent. When it comes to allowing roommates, be sure to specify that anyone not listed on the lease agreement cannot live in the rental to avoid students inviting friends to crash for a while.
When you communicate often, use a firm management style, and hold tenants to the detailed lease agreement, students can be wonderful tenants.