Pros and Cons of Student Housing
For those interested in cash flow properties that are located near universities, student housing offers the possibilities of making a considerable amount of money on a reliable basis. However, as a rental property goes, there are many pros and cons of student housing that you will need to be aware before pushing ahead. You will need to know if offering student housing is right for your needs and worth the effort.
Pros
New Tenants: A good property will have plenty of potential tenants, especially if it is within walking distance of the campus. If you can develop a good word of mouth about your property, you will only need to do some basic advertising such as planting a sign in the front yard and you’ll get plenty of interest.
Simple Accommodations: Because students will bring a considerable number of furnishings from home, you do not need to go overboard in preparing the property. Just make sure it is clean, repaired, and have some basic furnishings and appliances. By reducing the maintenance costs, you can use the extra money to update the furnishing and appliances when needed.
Raising Rents: Arguably the biggest advantage that student housing offers for you is the ability to raise the rent on a frequent basis. This is especially true for properties that are within easy walking distance of campus. Such properties mean that you can raise the rent for new tenants from 10% to 25% or more on an annual basis. Because many colleges have encouragements, if not outright requirements that the underclass must be housed on-campus, you can still get juniors who may stay on your property for two years.
Parents Often Back the Lease: If for some reason the students back out of the lease, you should be able to track down their parents who often back it with little issue.
Cons
Noise: If you’ve ever been to college, you understand that noise is a big issue. While the noise itself does no damage to your property, it can really annoy the neighbors and that spells trouble for keeping your property licensed in the city. Of the many pros and cons of student housing, noise is the one that can prevent you from renting your property again.
Property Damage: Let’s face it, your rental property will be filled with 19 and 20-year-old kids which means that damage is going to happen. You will most likely need a property manager who can deal with what has happened and take the replacement money out of their security deposit. Plus, instruct your tenants that if anything happens, call the property manager quickly so it can be taken care of ASAP.
Hidden Damage: In addition to the obvious damage, there is also the hidden damage that students may not be aware of or fully understand that can cost you money. A running toilet for example can cost you hundreds of dollars in utility bills, yet get overlooked by teenage students who don’t fully understand what a running toilet means. Damp basements where mold might grow or the early signs of parts wearing out on the washing machine or air conditioner that get overlooked may cost you hundreds of dollars as well.
So, you must decide if student housing is the right option for you.