Student Rentals
What are some of your thoughts about investing in SFR in a small college town? Seems to me that you're pretty much gauranteed tenants. (summers could be slow) What are some of your experiences and/or advice? I've found a property where the numbers seem to work out but I'm not sure if I want to deal with the headache of students.
It sounds like you have already answered your own question. Students can be a pain in the azz especially ones whose priorities are severely skewed.
To address the slow summers that you mention try implementing this plan in an area that is also a summer destination. Here on the east coast, any college by the sea will do. Then you get student rentals as well as vacation rentals (2 completely different animals).
Many of these seaside learning institutions are small colleges that are also expensive colleges...this means the bulk of the student population comes from an upper mid-class or even a wealthy background and daddy can co-sign the lease. Then you get paid and you have somebody w/ some assets on the hook for damages.
A fellow investor friend of mine rents some of his units to students and uses the "cool older guy" approach. He accepts that they will be partying and addresses that up front with them-says its ok with him as long as they take care of the house. He makes his presence around the property known but does not give them a hard time. "Just here to do some maintenance", wink, wink. He claims it is remarkable the return response that he gets. As long as they don't have the police at the property or create problems for the neighbors...it's fine with him. Of course they need to also take care of his house.
Students are like any other tenant; they all bring headaches but it depends on how you handle them and whether these are the particular headaches you want to deal with.
I have about 6 units in a college town, i make sure to get the largest security deposit i can get, normal 1 months rent. I expect for them to pay on a bi weekly basis. I try to get co-signers, ie parents, and everyone that is going to live there to sign. Make sure you see what the colleges off campus housing policys are and make sure similar wording is in the agreement. On those units I get the best insurance that is offered. Hope this helps! If you want to own some units up here i would love to manage them for ya!
Aaron-
What company writes the insurance for the student rentals? We have difficulty finding it and it would be helpful to know of one in MI. Thanks!
[ Edited by norrist on Date 01/06/2004 ] [ Edited by norrist on Date 01/06/2004 ]
Jeff,
Seeing that you are in SW Ohio, be advised the insurance, when available, is usually considerably more expensive for student rentals...
I have a couple of SFR that are rented to students. I never make my security deposit and the rent the same. It makes it too easy for the studuents/Tenants to walk away that last month and feel they have paid by just saying take the deposit. I make sure they understand the deposit is for deposit only (to cover cleaning, repairs, ect.)
Norrist, do you have any sense of insurance rates? PM if you want.
The SFR in question is going for about 110k, permit for 4 students. Rents out at 1,500 a semester. Also, when students are renting SFR do you generally have them cover utilities? As far as the headache of dealing with students. I'm fine with that. I'm just turned 24 and am going back to school full time next year at the school in question. I might even stop by for a party or two.
When renting to college kids, do not make a 10 month lease, make it a 12 month lease, and give them the option to sublet for the summer months. Most of the time, they'll just pay the rent for the summer. Grad students are the best tenants, as they don't really party as much as the undergrad kids.
Also, athletes with kids can sometimes (depending on the school) get waivers for subsidized rent from the university in off campus housing. A friend of mine used to live next door to a current NFL player, who had 3 kids, and lived in a house subsuduzed by university.
The cool older guy thing is a good idea, but if you can't do that, then hide behind a large (fake) corporate identity.