A line from John Belushi’s character in the 1978 movie Animal House sums up the concerns many landlords have when it comes to renting to college students: “Food fight!”
While it’s true students can be hard on rental properties, many property managers’ fears are overstated. Sure, students can be demanding renters, but the disadvantages of renting to them are often outweighed by the fact that college students represent a large pool of potential rental income. And, often, they’ll pay top dollar to boot! Consider Steve Miller, a successful real estate investor who chose to rent to college students at the State University of New York at Cobleskill because “student rents are so lucrative.”
So how do you reconcile the potential for increased wear and tear with the promise of higher rents and fewer vacancies? The big shots on Wall Street call it risk management. Others call it common sense.
1. Ask for a guarantee
Forget about running a credit report on college students. Chances are they won’t have much credit history to look at. Instead, get a parent to sign the lease as a guarantor or co-signer and run the credit report on Mom or Dad.
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2. Collect a larger deposit
Students aren’t inherently bad, but many of them do cause more damage than your average renter. That’s why many landlords ask college students for a larger security deposit than normal—one or even two months’ rent. But be careful. Some states limit the amount of security deposit you can collect so be sure you know the rules.
3. Stop by for a visit
Most leases have a provision that allows the landlord (or his agent) to inspect rental properties during the agreement term; however, many landlords never take advantage of this clause. This can be a mistake, especially when it comes to college students. You don’t need to bring the white glove with you, but stopping by on a regular basis will help you spot problems early on and keep your tenants honest.
4. Get some help
Though students will often pay top dollar for rent, they can also be a lot of work (think late night parties and calls to the police). Before you have them sign their lease, take a long look in the mirror and ask yourself if you’re up for the challenge. If not, consider getting some help by hiring a local property manager. Though they may charge as much as 10 percent of the rent, property managers can be worth their weight in gold, especially for those landlords who live out of town.