Who are college students?
There are over 18 million students enrolled in colleges in the US.
Undergrads account for around 14 million of the student population. The rest are postgrads and other students.
And the number of non-traditional students is growing rapidly.
Non-traditional students are:
- Over 24 years old: In fact, over 5 million college students enrolled in 2023 are over 24 years old.
- Attending college part-time: Around 37% of college students are studying part-time. And the average age of part-time students is 27.
- Attending or returning to college after a break: Though taking a break after high school isn’t that common in the US, taking a break in the middle of a degree is common. A study of community college students in Texas showed that 94% had taken a break during their degrees.
- International students: There were roughly 700,000 international students enrolled in the US colleges in 2020-2021. That’s estimated to rise to closer to 1 million in 2022-2023.
- Parents: There are nearly 4 million student parents pursuing college degrees in the US.
That diversity is great for student housing investors like you who want reliable, trustworthy tenants.
Both traditional and non-traditional college students choose to live off campus, and your property could be the perfect solution for them.
Next, we’ll talk about how to get started renting to college students.
6 tips for renting to college students
How do you rent to college students?
Here are my top tips on how to find the right tenants, set your price, and more.
#1: Screen tenants
College students tend to be young and inexperienced. This might be their first time away from home, so they don’t know how to care for a property yet.
Luckily, you can avoid horror tenants by screening potential candidates.
I do this using a method I call the PRIME method.
P – Placement of the ad
R – Review social media
You can check your prospective tenants’ social media profiles. This will show you if they are heavy drinkers, drug users, or frequent party people—great information to have before renting to them.
I – Identify the type of student
Is the person difficult to get along with? Angry, entitled, or dismissive students will make the renting process way more challenging. So will needy or picky tenants. It’s important to screen people out early on.
M – Measuring responsiveness
Responsive students tend to be better tenants. See how quick they are to respond to messages and provide supporting documents. Is their communication professional and calm? These are important factors.
E – Ensuring proof of income
Does your prospective tenant have proof of income? I recommend looking at their FICO scores and asking for supporting documents. This is different for students who rely on their parents for income. In that case, request their parent’s bank statements for proof of income.
Another way to do this is to review financial aid or student loan documents to ensure they can pay rent on time.
Tip: If a prospective tenant ticks most of the boxes but the FICO score is a little low, ask for a co-signer.
A co-signer is normally a parent or guardian. This step will guarantee that the rent is paid even if the student can’t pay it themselves.
For more on how to find amazing tenants, check out this video:
#2: Set the right rental price
If you’re just starting out in student housing investing, you’re probably wondering:
What is a good rent price for a college student?”
Short answer? It depends on location.
If you’re renting to college students, your property is probably in a college town.
Research the market by reviewing student housing listings in the area.
Beyond the market average, there are a few key factors to consider when setting the right price:
How much does your mortgage cost?
This is the primary factor. You want the rent to cover the mortgage, any repairs throughout the school year, and extra profit for your student housing business.
What amenities are you offering?
Students need more basic amenities than most renters on the market. But if your property has modern furnishings, parking, washer-dryers, and other facilities, you can charge a premium for rent.
How many students are you renting to?
As a rule of thumb, I recommend three renters for every bathroom. So a six-bedroom house should have two bathrooms. The more tenants you can have in your property, the more affordable you can make your rent.
Remember that students don’t have a lot of money. 34% of undergrads and 38% of grads earn less than $20,000 per year.
So pricing your rental property needs to be competitive within the local market but also enough to make you a profit.
Even with affordable rents, you can make a great return on your investment. Check out this video to see how I do it:
#3: Set up house rules and a lease agreement for college student rentals
The best way to protect yourself as a landlord is to have a lease agreement.
You also want to set clear rules from the start.
Many students – especially young college students – have never rented before.
So it’s better for you if you spend extra time explicitly explaining the terms and conditions of your lease agreement to them.
That way, you can clear up any misunderstandings that could cause problems down the line.
Your lease agreement should include clear instructions on:
- How to pay rent and utilities
- Who is responsible for basic repairs (like changing the light bulb)
- How to contact you when appliances break
- Cleaning duties
Then there are house rules.
House rules are more subjective and depend on you as a landlord.
For example, you might have house rules around smoking, drinking, partying, and house guests. Make these super clear to your tenants from the beginning.
#4: Ask for a security deposit
A security deposit is a common practice for renting out a student property.
I personally collect 1-1.5x month’s rent, depending on the property’s location.
That is, in some locations 1x monthly rent is more common. In others, 1.5x monthly rent is more common.
These security deposits usually add up to $3,000 to $5,000 per property, when collected from all the students.
This is an essential part of protecting your student housing investment.
With that $3,000-$5,000, you should have enough money to replace most things that break.
If the repairs are the student’s fault, you can deduct the cost from their security deposit.
#5: Offer amenities students value
Students are pretty low maintenance when it comes to housing, as many of them renting for the first time.
However, there are some amenities students value.
Here’s a quick list:
- Convenience: Many students have side jobs, so they are constantly on the go. So, convenience can be important to them.
- Fast internet: The most in-demand amenity for student housing in the US is strong, reliable WIFI.
- Communal areas: Gen Z tends to favor community-focused housing. So having good communal areas is a bonus.
- Affordability: The cost of renting a bed on campus has gone up by 7% in 2023 alone. So offering an affordable off-campus option is a good idea for a sustainable student real estate business.
If you can provide great amenities, your property will always be in high demand.
#6: Market your property
You need to market your property where students are likely to see it.
Here are some ideas:
- Facebook groups
Now you know how to rent to college students, let’s talk about why it’s a good investment opportunity.
Read on for more.
Renting to college students: Pros and cons
If you’re debating whether to rent to college students or not, here are the pros and cons to help you make the right decision.
Pros of renting to college students
Let’s start with the pros of student housing investing.
1. You don’t need to remodel as much
Truth: Students are less picky than young professionals or family renters.
Why? Because this is traditionally the first time they’ve rented and it’s a shorter lease.
Your property might need some light remodeling to make it comfortable. But you don’t have to spend as much as you would for other renters.
2. You can rent by room
By renting per room, you get rental income from each tenant.
As opposed to renting to a single family, you can get more income without raising the rent too high.
Plus, even if one student moves out, you can still make money with part occupancy of the property.
3. You can work with highly motivated students
One of the reasons I like renting to students is that I can support highly motivated, ambitious people.
Knowing that I am helping them by providing an affordable place to live is really fulfilling.
Cons of renting to college students
So student housing is a great return on investment and rewarding. But what are the cons? Let’s talk about them:
1. Students tend to be inexperienced tenants
Most students are renting for the first time, so they don’t know the rules of renting yet.
That means you are more prone to property damage or unreasonable tenants.
Luckily, you can protect yourself with a solid lease agreement and clear house rules. Screening your prospective tenants properly will also help.
2. You could face property damage
All rental properties face damage, but student housing is more likely to get damaged.
This is all about the tenants you rent to. If they love to party or have a lot of house guests, you could face more property damage over time.
Having a security deposit from each tenant helps cover any unexpected repairs.
3. Your tenants might leave for the summer
Many students leave their college town during the summer. So what do you do with an empty property for a few months?
I have two ways to solve this problem.
First, I rent the property for 12 months. This makes sure you don’t have several months of no renters.
Second, I allow my tenants to sublet their rooms to summer students. So if they want to make a little extra income while also keeping the property occupied, they can do that.
Is college housing a good investment?
Yes, student housing is a great investment.
First, it’s in high demand.
62% of college students live off campus but not with their parents.
38% of US students in 2012 said they would most likely live in mid-rise apartments, community cottages (33%), single-family houses (13%), and high-rise apartment towers (9%).
As a private property investor, you can provide more modern furnishings and varied accommodation than on-campus options.
College housing is also recession-proof.
During the 2008 recession, the college population actually grew by almost 16 percent.
Even though enrollment for higher education has leveled out since 2020, the rise in non-traditional students means that you can have a stable return on your investment for years to come.
There you have it! That’s how to rent to college students in 2023.
Student housing investment has a huge return if you can rent to great tenants.
If you want help with attracting college students for your investment properties, check out my coaching services.