If you own real estate in Tuscaloosa, Alabama then you are in a prime market for renting your property to students attending The University of Alabama. There are more than 38,000 students attending the University, and there are only 8,400 beds on campus. That means that 78% of the students must find housing off-campus, which represents a significant market of potential renters to target. However, there are a number of important differences to be aware of when renting to college students.
Student Properties - Rent by the Bed
With the growth of purpose-built student housing during the past 12 years the model in student housing is to rent property by the bedroom, and not by the unit. Parents have come to expect this as they do not want the liability of guaranteeing the rent for their student’s roommates, who they may or may not know. While this requires more paperwork in the form of separate leases for each tenant, it also allows the property owner to collect higher rents. When the rent is spread across multiple roommates by the bedroom you can charge a higher rent, yet still be affordable within the market. For example, if you own a three-bedroom condo, you might charge a family $1,400/month, but when there are three students renting the condo, you could charge a higher rate of $1,800/month, which works out to an affordable $600 per student.
Require Guarantors – Peace of Mind for Getting Paid
It is unlikely that the student will actually be the person paying the rent. The majority of college students have not established a credit history, therefore; you will need to require a guarantor to sign the lease. By having the parents as a personal guarantor, you are much more likely to get your rent paid on time and in full each month.
Students are most likely first-time renters and lack the basic skills or knowledge about basic property upkeep. You should not rely on the students to change out the air-filter each month, and you should be prepared to respond to basic calls like changing a light bulb. We recommend having a scheduled preventative maintenance program for your property as it is very unlikely that the student renter will take care of the basics or report small maintenance issues that can end up being very costly if not addressed early. By having a regular preventative maintenance program, you can keep maintenance costs to a minimum, and keep your tenants happy.
Students tend to move each year they are in college, so plan to turn your property and move-in new tenants each year. We generally turn a property in 5-7 days to minimize the time a property is vacant. In order to have a fast and affordable turn, it is important to have relationships with key vendors that you work with on a regular basis as the end of July and beginning of August are the busiest times of the year for vendors in a college market where the majority of properties are being turned at the exact same time.
Installments, Not Monthly Rent
It is a subtle, but important difference. Our lease states what the total rental amount is for the term of the lease, and that the Tenant may pay it in 12 equal installments. This is important in that it enables you to not pro-rate for the days you are turning the unit in between tenants. For example, if the total rent for a condominium is $21,600, and the Tenant is allowed to pay it in 12 installments, then you collect $1,800 per month. If you state the monthly rent is $1,800, then you will have to pro-rate the seven days the tenant does not have access to the property while you turn the unit. That would cost you $414.25 in rent. This is just one example of how having a professional property manager handle your property will pay you dividends.
Marketing to College Students
There are a number of features that are very important to college students that should be highlighted in your marketing. These include proximity to campus, high-speed internet, resident utility billing service, safety, and providing a washer and dryer. Students rely heavily on the internet to find their next home, so it is important to market to students on the major ILS services like Zillow, and to have a website where they can complete the application, lease, and pay all fees and rent.
This post gives you a big picture perspective in regard to renting to college students. At Spaces, we specialize in renting to college students, and we can help you maximize your return in this attractive rental category. Call us today if you are interested in discussing how much your property can rent for, and how we can help you.