The Pros and Cons of Student Rentals- Look Out For Pro #1

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If you remember your college days, I’m sure you can think of some of the great places you may have lived or some of the oh so scary places that some of your friends lived while in college.  I can vividly remember walking into the ‘Baseball House’ one night and nearly gagging when I walked into their kitchen.  Not only were there dirty dishes everywhere, but it was obvious that the landlords hadn’t fixed or updated anything in a long time.

Consider yourself lucky if you live near a university because this opens up a world of possibilities for you as an investor.  Not to say that you have to live by a university to invest, you can invest anywhere.  However, for your first one it may make you feel a little more at ease if you are close. If so, you may want to consider tapping into the student rental market.  The list below gives you some things to think about before plunging into this lucrative market.

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Pros

  • Financially lucrative
  • on campus housing shortages
  • tax benefits
  • large pool of tenants
  • few vacancies allowing stable rent for investors
  • Local entertainment, shopping, and food

Cons

  • Constant flow of tenants
  • Lack of respect for the property (occasionally)
  • Yearly upkeep and maintenance of house cosmetics
  • Supply and demand
  • Off season time (summer) may be hard to find tenants- consider this when determining rent prices
  • Not as passive of an investment as a home you would rent to a long time tenant

If you don’t live near a college or university and want to tap into this market, you still can from a distance.  One thing to remember with this type of investing is that you are dealing with young adults who are somewhat just entering into the real world.  You will have to be patient with them as they may not be used to bills and expectations.  Realize who you will be dealing with before you begin down this road.

As young adults, they may not be as eager to fix something that comes up in the property.  Therefore, keep in mind that you will need to be on call when there is a problem or have a property manager that can take care of issues as they arise.

Wondering about the ROI of a student rental, download our Property Analyzer so that you can run numbers on potential investments to see your cash flow!

 

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