The Landlord Lens - You Should Invest in Student Housing | Be A Better Landlord

Episode Date: August 30, 2024

Last fall, there were over 18 million students enrolled in degree-granting colleges and universities in America, and they all need a place to live. Here we break down some of the pros and cons of renting to students.

I'm Krista and this is Jonathan. We're here to help you be a better landlord. So Jonathan, we have been talking a lot about a certain type of real estate investments lately that I'd love to share with our audience. Student housing. Student housing. Can you define what we mean by student housing? Absolutely.

So student housing, when we talk about mom and pop landlords, it typically means off-campus housing. So that is housing near a college or university that primarily houses students. as the name would suggest. So there is on-campus housing run by the college itself, and that would be your dorm rooms, but then there's a ton of off-campus housing. So that's normally around the university. It's actually discrimination to say that you only will house students

in that rental unit that you own off-campus, but there are ways to make it way more attractive to students and ways to set up your rental to where you primarily have student renters. Okay, interesting. I know some people think of students as being really rowdy and maybe not the best tenants. Why should someone consider investing in student housing? Yeah. So they can be rowdy.

They aren't all, though. I mean, obviously generalizing there. So most students live in a place for about a year and a half on average. So that means that they, when they're graduated or they're ready to move on to somewhere else, they're going to vacate your unit. They will probably be able to refer. another student to your rental, which is really nice. It can cut down in your vacancy cycle. But also when they're only staying a year and a half, that gives you time in between when they

leave and you get a new tenant to make any necessary repairs or improvements or to raise the market rent, which is a pretty nice perk that you don't normally have with long-term rentals. We love to see it. Okay, so you've talked about some of the perks. What are some of the drawbacks that investors should consider? Yeah, one drawback is many students when they are renting the off-campus housing. It's the first time they've lived on their own. So there are some obvious challenges there. Some things that are a big deal, they may not think of as a big deal, and they may not notify you of it.

For instance, hey, there's a spot on the ceiling. Has that always been there? It's probably fine. I shouldn't tell my landlord. You as a landlord might be like, yes, please tell me. That could be a leak in the roof or something like that. So that can be a challenge, but that really is an opportunity for the landlord to just better educate them on.

you know, how to live successfully in the rental unit. Beautiful. So when it comes to assessing different types of property for student housing, can you break down the differences between single-family homes and multi-family properties? Yeah. Yeah, a lot of the same differences between those two will exist in student housing, just like they do with other long-term rentals. But single-family, you know, detached housing, you can typically charge more.

Students will pay more to have that kind of housing as opposed to a multifamily. They generally have more room, there's maybe their own driveway or dedicated parking. They might have a fenced yard, maybe front and back. So that's nice. You can charge more for single family. And then depending on occupancy laws that you may or may not have in your area, you can also add a wall, make a whole new room to be able to rent to someone else. So that's nice with single family.

A drawback of single family is it's probably going to be the gathering place. It may even be the party house. So there are ways you can build that into your lease agreement to try and control the parties. And then also charging more for security deposits, that kind of thing. With multifamily, you just have one roof to worry about. You have one yard to maintain. And you're probably going to have a lot more individual rental units within that multifamily property. So that's a nice park.

Love it. So it sounds like there's not a bad way to go about choosing a property for a student investment. Yeah, it's just kind of how you want. to build your business. There are a lot of different options. Okay. One other factor that we haven't yet discussed is parents and how they fit into this equation. Can you speak to that? Yeah. So you may be thinking of student housing and like, oh, I don't want to deal with the parents, but it can actually be a benefit. So a lot of students, when they are living on their own for the first time, they'll list their parent as a reference

or as even the guarantor, which can be nice for you, the landlord, because then you have some security that if the tenant pulls out of school, runs away, whatever happens, that the parent will then be financially responsible to pay that rent. But the other thing is most parents save for a really long time for their kids' college expenses. And a huge part of that is their room and board. So they've already got this money saved away, which means it's more likely that you're going to get your rent in full on time every month. Where can you find great student tenants? So there are all usual ways to find great tenants that works with students as well, like using TurboTenant for marketing your listing. But then there are also

other ways, like putting up an ad in the local coffee shop that's right off campus, or a lot of larger universities even have resources on their websites. So CU Boulder, for instance, has what they called Ralphie's List, and it's actually a website built on their domain where housing providers can just list their rental and put pictures, put all the information right there. So if you happen to have student housing available in Boulder, then you could put your rental on that site and get it in front of students. Beautiful. Okay. How hard is it to get started in student housing as a provider? It depends a lot in your market. It depends on what you're trying to accomplish and what market you're in. But ultimately, it's not that difficult. It's like any kind of real estate investing,

it's just a matter of having your processes, your systems, and having a plan. So we actually made an entire self-paced course, specifically about student housing, which is now available. And people can purchase it. They can go into it and learn a lot more than what we just talked about. But it goes through everything, right? Finding which market to invest in, which colleges you want to be near, how to find students, and then how to do a successful turnover and start it up with a new tenant. I am so excited about this course. We brought in two industry experts who are really thriving in their individual communities. They have very different perspectives of how to succeed. And so I feel like anybody who enrols is going to come away with real-world examples of how

to do this in their own backyard. Absolutely. Jonathan, thank you so much for breaking down the basics of student housing and how to become a student housing provider. If you have your own stories about what it was like as a student renter or you'd like to get in the game and have questions, please leave them down below. Don't forget to like and subscribe. Drive. TurboTenant is the all-in-one platform for landlords to manage their rental properties. From vacancy to tenancy, we have you covered with industry-leading tools and expert advice. Landlord better from anywhere for free at turbotenant.com.