Student housing rental property can be a great investment. It’s a high demand, high rent, low vacancy market segment. Of course, you must also balance some of the drawbacks that include a higher rate of turnover and the potential for increased maintenance and repair costs.
The best way to capitalize on your student housing investment is with strong hands-on management. Here are some tips to help you prepare and maintain the property, customize the lease, and develop good tenants in order to make your student housing rental business thrive.
Prepare and Maintain the Property
In the rental business, your greatest asset is the property itself. You want to do everything you can to maintain the property value, which means keeping it updated and in good repair. The good news? Tenants in student housing are not necessarily looking for high-end granite countertops and vaulted ceilings. Instead, they need clean, efficient spaces, and a little curb appeal wouldn’t hurt.
Here are some ways to prepare and maintain your property for student housing tenants.
Install Durable Materials
Students are not usually interested in “setting up housekeeping.” They are going to move in, do what they do, and then leave after a semester or two. You want to give them a functional living space that will stand up to some careless behaviors. Plush carpets and finicky window locks will not hold up for very long before they need to be replaced. It is better to use durable materials and no-fuss hardware in your student housing rental property.
Opt for hard-surface flooring or commercial-grade carpet that will stand up to high traffic and clean easily. Choose window locks and doorhandles that are easy to use and hard to break. Be sure bathrooms are fully caulked to prevent water from seeping into walls. Avoid installing upgraded improvements like fancy fixtures or ambient lighting and choose sturdy furnishings that don’t require any special care.
Do Regular Inspections
Seasoned tenants will alert you when there is a maintenance issue, but students may not be as conscientious. Regular inspections will help you catch small maintenance issues like water leaks before they become a big deal. They will also allow you to look for rule or safety violations like too many people living in one apartment or an unauthorized pet. Create a checklist for yourself to use during property inspections. You can even give a copy of the list to the tenants in advance so they know what you are looking for.
Practice Responsive Maintenance
There are two benefits to responding to maintenance issues right away. One is that you can often fix a small problem before it becomes a big expensive one. When the tenant calls to say the pipe under the kitchen sink is dripping, you’re probably looking at a quick fix. If you let that drip continue long enough, you may find yourself replacing the pipes and the cabinet at a significantly higher cost than simply tightening the fittings.
The other benefit to being responsive about maintenance issues is that it helps train your tenants to call you as soon as they discover a problem. When a tenant sees that you respond right away to maintenance calls, they will get the idea that maintenance is important to you. They will be more likely to alert you to even small maintenance issues if they know you will respond promptly.
Invest in the Right Insurance
For student housing rental property, your insurance needs go beyond the typical property coverage. You need the added liability and business interruption insurance included in a Businessowners Policy (BOP). Turning to an insurance carrier that is well versed in providing student housing insurance is ideal. Having the right coverage in place can protect your bottom line from repair costs and so much more.
Customize the Lease
Making the most of any rental property requires keeping your rental units filled with paying tenants. There are some ways to customize the lease agreements for student housing rentals that will make it easier to maintain your profit margin.
Match Leases to Tenants
With traditional rental properties, there is one lease per unit. For example, when you rent to a family of four, there is just one lease. Only one person is held legally responsible for the rent and other terms of the tenancy. Roommates in student housing are seldom related or responsible for each other like that family of four. These are more transient groupings of people who may come together and drift apart suddenly.
Requiring each roommate to sign a lease establishes their responsibility for a portion of the rental. If one roommate, for example, is short on rent money, you can at least expect to collect rent from the others. You can hold that roommate responsible for their back rent and late fees without discouraging the others from continuing to pay their rent. If you have to evict the non-paying roommate, you do not jeopardize the other leases for that unit.
Get a Cosigner
Students often do not have a credit or rental history. Many are not financially independent or even legal adults. Requiring an adult cosigner (like a parent) on the lease will give you better recourse if the tenant breaches the contract. Your lease should be joint and several, meaning you can hold both signers, or each signer, responsible for all the terms in the lease.
Be sure the lease cosigner has good credit. Keep the cosigner’s contact information and get in touch with them if there is ever a problem with that tenant fulfilling any of the terms of the lease. Most times, the cosigner will handle any problems because they do not want their credit to be affected.
Students are generally not experienced renters, so you can’t assume they know how to behave. Adding rules to the lease will help your tenants understand what is expected of them. You can use the lease to establish quiet hours, explain the parking arrangements, and define your pet policy. You can also include a list of expectations like taking out the trash on a certain night, clearing the snow from the walkways, or keeping stairs and hallways clean. Having these rules in the lease makes it easier to enforce them since breaking the rules would put the tenant in breach of the contract.
Require Renters Insurance
Many renters, young and old, do not realize how important renters insurance can be to protect their personal property in case of damage or theft. They tend to rely on the landlord’s insurance, but even a BOP does not cover tenants’ personal property.
By requiring renters insurance, you are teaching the tenants in your student housing rental property how to be responsible for their own things, and you are avoiding some possible lawsuits. Even though you are not responsible for tenants’ personal possessions, that fact may not keep them from suing you to try to recover damages. Renters insurance is an inexpensive way for your tenants to protect the things that are important to them.
Develop Good Tenants
Students are often young and inexperienced at living without their parents, which can make them a unique challenge for landlords. As a landlord, you have an opportunity to help shape them into good tenants who will protect your property and provide a good return on your investment.
Screen Tenants Carefully
Screening tenants is always a good idea, but it is especially important in student housing rentals. Background and credit checks on your student tenants won’t necessarily provide you with the information you need to make a good choice when selecting renters. Many students are too young and inexperienced to have any real public records. You have to be more creative about asking questions on your application and seeking information from other sources to adequately screen student tenants.
Ask about their income and how they plan to pay the rent. Remember to screen their cosigner, too, to be sure they are financially stable. Also, ask students if they have a car, have roommates they’d like to live with, and how long they plan to stay at school. You might consider looking them up on social media, too, to see if they post about any illegal activities.
Create an Emergency Plan
Develop and post an emergency plan for tenants to follow. Inexperienced tenants especially may not know what to do if they see a fire in the building or a storm knocks out the electricity. Include a building evacuation plan, information about a safe place to congregate, and a directive to dial 9-1-1. By helping tenants respond quickly and appropriately in an emergency, you may also be protecting your building from extensive damage and limiting injuries for which you might be liable.
Develop Relationships With Tenants
Tenants of any age will show more respect for the property when they know the landlord. Students, being so young and inexperienced, will generally appreciate getting to know the landlord and being able to ask any questions they have about independent living. If you are readily available and easy to approach, they might ask you if grilling inside the garage is a good idea or if you mind if they sit on the roof outside their window. Building rapport with your tenants could present you with opportunities to mitigate risk and avoid damage to your property.
Visit the property often so tenants can see you take care of the place. Make a point of speaking to tenants and getting to know them by name. When you see something out of place, be sure to ask about it. If someone is parking their car on the lawn, knock on their door rather than sending an email asking them to move it. Developing a face-to-face relationship with the tenants in your student housing rental property will help reduce stress and maximize the bottom line on your rental business.
Protect Your Student Housing Property
Student housing rental property can be a great investment if you manage it properly to capitalize on the advantages while minimizing the risks. At Millers Mutual, we know the student housing rental market and are experts at mitigating risk. Contact a local insurance agent to learn more about how Millers Mutual Insurance can help protect your student housing rental business.