Renting to college students might sound risky, but there’s a reason off-campus rentals have been attracting capital from large developers and investors.
In many cases, parents or other co-signers guarantee leases, which can reduce the risk of unpaid rent, and students generally don’t move in the middle of the academic year, says Ryan Lang, vice chairman and head of the student housing group at New York-based commercial real estate firm Newmark.
“Once you lease up, you typically have your rent roll in place for the next 12 months,” he says. Student housing is also seen as “recession resistant,” he adds, because people tend to stay in school longer or go back to the classroom for graduate degrees when jobs are scarce.
But while investing in student apartments has benefits, it has some unique property management considerations to keep in mind. Here are three key areas to prepare for:
Property owners catering to students can’t escape hectic periods tied to the academic calendar. Also, all students want to lease units and move in and out in the same short windows, and many move each year. Pete Tverdov, who manages student rentals near Rutgers University as owner of New Jersey-based brokerage and property management company Tverdov Housing, estimates only one-quarter of his student renters renew each year.
“Do the math: If we have 100 student rentals, we have to turn over 75 to 80 units in two weeks,” he says. “It’s brutal.”
It’s a good idea for apartment owners and managers to spend time in advance planning for those short, busy turnover periods.
Owners renting to students also need to recognize that some of their residents might have never rented or lived on their own before. It’s a good idea to proactively address apartment etiquette and issues first-time renters could face.
Tverdov recalls a student who was furious that her apartment’s electricity didn’t work. The problem? She never called the utility company to register the utilities in her name.
“If you go back to when you were 20, maybe you didn’t know some of that stuff either,” he says.
To help students adjust to apartment living, Tverdov provides a handout covering common questions when they pick up keys and posts videos on the company’s YouTube channel addressing issues like how to lock double-hung windows and fix a tripped circuit breaker.
Property owners should also be prepared to work with younger renters’ parents, who are often involved in the leasing process, says Harrison Cohen, co-founder and principal at Harbor Property Management, which owns small- and medium-sized apartment buildings near the University of Chicago. Both parents and students can access Harbor Property Management’s online portal to pay rent or submit maintenance requests.
“Communication with parents is just as important as communication with students,” says Cohen, also a senior vice president and principal at Chicago-based multifamily brokerage Triton Realty Group.
“They’re learning everything they can about our properties long before they ever think to contact us. It’s a massive shift in renter behavior,” Petersen says.
PeakMade invested in virtual tours that let students explore units and building amenities from property websites and put its properties on online listing services popular with students, he says.
Still, don’t underestimate the power of word of mouth, which both Tverdov and Campus Apartments say is a key marketing tool.
“A property’s reputation in the minds of students and/or the university administration can dramatically alter the leasing at a property,” says Miles Orth, COO at Philadelphia-based Campus Apartments.
Tverdov hires Rutgers University students as leasing agents to promote properties in student social media communities.
“We train them, and they go out and hustle,” he says. “It’s a great part-time gig for a student.”