There’s no doubt that allowing students to live in your rental property is a bit of a gamble. However, the arrangement can also pay off handsomely if you screen for the right tenant and set clear rules and expectations in the rental agreement.
Still, it’s wise to consider both the pros and cons of renting to students before opening your doors to them.
Pros Of Renting To Students
Consistently High Demand
You can count on demand for student living accommodations to remain high as new students enter post-secondary institutions every year.
Enrollment at universities has skyrocketed in the last few decades. According to Universities Canada, over 1.4 million full-time and 266,000 part-time students studied at universities across Canada in 2019.
As a landlord, you can easily extract a higher profit from your property rental business if you opt for students as your tenants.
The reason is that students are more likely to live with roommates than the general population. This arrangement helps keep their living expenses down and maintain a thriving social life. As a result, you can comfortably charge a slightly higher rate per student.
In addition, studies show that rental properties located near schools generate rents 30% to 40% higher than those located far away.
Students expect far less from a rental property than the general population. They’re not looking for a unit with fancy architecture, modern appliances, or lavish furnishings. Most will be content with the bare necessities.
This fact bodes well for you as a landlord. You won’t need to dish out thousands of dollars on upgrades and pricey gadgets.
Easy To Attract Tenants
Advertising your rental property to students is easy and cheap. There are numerous rental sites and apps available, many of which allow you to post a free ad. And since most students are no strangers to apps, they can quickly find your listing.
Some universities also work with landlords to help find accommodation for students during the start of a new school year. And referrals by other students are common as well.
Some landlords argue that because students have fewer financial resources, they pose a higher risk for non-payment of rent. However, in many cases, the opposite is true.
For example, some students receive financial help from their parents to ensure they can cover the cost of the rent. Their parents may also act as co-signers for the rental agreement.
In addition, many students have access to a line of credit from a bank or receive funding from a government student loan program. In most cases, the amount is enough to cover their living expenses, including rent.
Cons Of Renting To Students
Little Or No Credit History
The vast majority of students tend to be relatively young, which means they likely have little or no experience with loans or bill payments.
As a result, if you pull their credit report, you may discover that their credit score is non-existent. The presence of zero or low credit scores will make it exceedingly difficult to vet them properly.
Poor Money Management
Being young and inexperienced, students can lack prudent money management skills.
Should they splurge on impromptu shopping sprees or frequent nights out with friends, they can quickly deplete their bank accounts. As a result, they risk falling behind on rent, and you may have no choice but to evict them.
Increased Risk of Property Damage
Whether by accident or carelessness, students may cause damage to walls, appliances, floors, light fixtures, and other structures in your unit. They may also fail to keep the property clean and tidy, resulting in an infestation of bugs, rodents, etc.
With fewer commitments and responsibilities, it’s not uncommon for students to frequently change plans and make hasty decisions. And this includes the place they choose to live. Some students may even refuse to sign long-term lease agreements, preferring to pay rent month-to-month.
As a landlord, you must prepare to deal with a high turnover rate. Should a student cease being a tenant mid-way through the school year, your unit may remain vacant until the next semester or the school year starts. The result is a loss in rental income over many months.
Most young people love to party, stay up late, listen to loud music, etc. While there’s nothing inherently wrong or out of the ordinary with students having some fun, excessive noise and rowdiness may disturb neighbours.
These incidents can instigate a slew of complaints and arguments. And in some cases, the police may get involved, particularly if neighbours suspect illegal activity.
What To Consider When Renting To Students
Before renting your property to one or more students, prepare accordingly by drafting a comprehensive rental agreement and setting concrete expectations. Here are some things to consider:
It’s essential to set a quiet hours policy when renting to students. As mentioned already, students have a reputation for being noisy, especially at night. Include this rule in your rental agreement, clarifying that excessive noise is prohibited, especially past a specific time.
As mentioned, students can be notorious for causing property damage. If you’re considering taking on a student as a tenant, never forget to collect a security deposit when it’s time to sign the rental agreement. You don’t want to be left on the hook for expensive repairs once their lease ends.
Asking for a co-signer to sign the lease agreement is a wise move, as it helps to minimize disruption in rent payments. The co-signer will most likely be one of the student’s parents, who’ll step in to cover any rent payments they miss.
It’s essential to be aware of the advantages and disadvantages of renting to students. You’ll need to decide whether you’re comfortable leasing your property to young people who earn little or no income. And not to mention, who may party a little too hard from time to time!
But as with any tenant, building a good rapport is crucial as is maintaining open and honest communication. Ensure you treat students with respect and periodically check in on them to address issues they may have. Doing these things can help establish a strong tenant-landlord relationship.
For many students, it’s likely their first time living away from home independently. You can help make the transition smoother by doing little things to help make their lives easier. One way to do this is to allow them to pay rent online. Being young, they’re likely tech wizards already and pay their bills online – they’ll appreciate the convenience.
Luckily, online scheduled rent payments are super-fast and easy to set up with SingleKey’s Rent Collection tool. You can be up and running in just five minutes. Simply provide the lease details, connect your bank account, and invite the tenant to do the same. And as a bonus, your first three tenants are free!