Renting properties to students can be a lucrative venture for landlords, offering a steady stream of demand and potentially higher profits. However, it also comes with its own set of challenges, including concerns about property damage and irresponsible behaviour.
In this article, we’ll explore the benefits and drawbacks of renting to students, along with suggested policies to mitigate risks.
Benefits of Having Students as Tenants
Landlords want to maximize their return on investment and grow their wealth over time. Renting to students can help you achieve this goal. Here are some of the benefits that come with renting to student populations in your area:
Consistent High Demand
One of the primary advantages of renting to students is the consistent demand for student accommodation near educational institutions. This presents landlords with a resilient and lucrative market opportunity. By leveraging the unique characteristics of this market segment, such as location proximity, demographic diversity, and academic calendar-driven demand, landlords can maximize rental yields and ensure a steady flow of tenants year after year.
Potential for Higher Profits
Landlords often find that they can charge higher rents for student accommodations. The ability to charge higher rents for student accommodations and capitalize on multiple occupancy arrangements presents landlords with a compelling opportunity to increase profitability in the student rental market. By leveraging factors such as supply and demand dynamics, desirable locations, and efficient space utilization, landlords can maximize rental income and achieve attractive returns on their investment properties.
Varied Expectations
A shift in expectations of students regarding property amenities presents landlords with opportunities to reduce costs while still providing suitable accommodation for their tenants. By understanding and accommodating the preferences of student renters, landlords can optimize their residential rental properties to meet the practical needs and budgetary constraints of this demographic, thereby enhancing their overall profitability and competitiveness in the rental market.
Easier to Attract
The flexibility and willingness of student renters to consider a wide range of properties present landlords with endless opportunities. By offering properties located close to campuses, highlighting desirable features for student living, providing budget-friendly options, implementing targeted marketing strategies, and offering flexible lease terms, landlords can effectively appeal to student tenants and maintain high occupancy rates in their rental properties.
Drawbacks of Renting to Students
Despite the many benefits of renting to students landlords must be aware of some potential drawbacks to ensure that their rental investments are protected. Some drawbacks include:
Irresponsible Behaviour
Some students may engage in disruptive or irresponsible behaviour, such as excessive noise, parties, or disregard for property rules. Landlords may need to address complaints from neighbours or take disciplinary actions against tenants.
Poorer Money Management Skills
Students are often inexperienced in managing finances, which can lead to late rent payments or difficulties in budgeting for living expenses. Landlords may encounter issues with unpaid bills or unexpected financial problems.
Higher Risk of Property Damage
Student accommodation can experience higher rates of wear and tear due to frequent turnover and sometimes careless behaviour. Landlords may face increased maintenance costs and repairs resulting from damages caused by their tenants.
Little or No Credit History
Many students have limited or no credit history, making it difficult for landlords to assess their financial reliability. This lack of credit history increases the risk of non-payment or default on rent.
Higher Turnover Rates
Students typically rent for shorter periods, such as academic semesters or terms, leading to higher turnover rates compared to long-term tenants. This frequent turnover can result in increased vacancy periods. Thankfully, there are many steps landlords can take to retain tenants.
Policies to Implement When Renting to Students:
There are several policies landlords should consider implementing when renting their properties out to students. Note however that all policies must adhere to landlord-tenant and Fair Housing Laws. Here are some policies landlords could include in their lease agreements:
Quiet Hours
Establishing and enforcing quiet hours in rental properties play a crucial role in promoting tenant well-being, minimizing disruptions, supporting academic success, protecting tenants’ rights, enhancing property reputation, and ensuring legal compliance.
By implementing clear guidelines and proactive measures to maintain a peaceful living environment, landlords can create a positive and harmonious atmosphere for tenants and neighbours alike, contributing to the overall success and sustainability of their rental properties.
Lease Guarantor
Landlords may consider requiring a lease guarantor, such as a parent or guardian, for student tenants who lack a strong credit history. This provides an additional layer of security in case of default or damage.
Security Deposits
Requiring a higher security deposit from student tenants can provide landlords with financial protection against potential damages or unpaid rent. This deposit should be clearly outlined in the lease agreement and returned promptly upon lease termination, minus any legitimate deductions. Landlords should review local security deposit legislation to ensure that they aren’t charging over legal limits.
Bottom Line
Renting to students offers both opportunities and challenges for landlords. While the consistent demand and potential for higher profits are attractive, landlords must also navigate the risks associated with student tenants, including financial instability and property damage.
By implementing appropriate policies and strategies, such as quiet hours, security deposits, and lease guarantors, landlords can mitigate these risks and maximize the benefits of renting to students. Ultimately, success in student accommodation rental requires careful management, clear communication, and a proactive approach to addressing issues as they arise.
If you need help managing your rental properties consider working with a trusted company like Real Canadian Property Management Solutions. Contact us today to learn more about our services!