Student property investment has long been considered one of the best ROI approaches to rental property investment. However, you won’t read anywhere that it’s easy. Investing in student housing is going to take more of your time and create a few more hassles for you. The number of students moving through universities creates a higher turnover rate than any other rental property type. This higher turnover creates some other issues for the landlord.
Late Rent: Students, even those on scholarships or with well-to-do parents, are usually strapped for money for one reason or another. They are challenged with student loans and associated high fees. Students are at an age where they may also place a premium on other life experiences that may place rent at a lower priority level. You’ll spend more time in collection of late rents with students, though hiring property management out can take this off your plate.
Unpredictability: Students tend to have a shorter term outlook on life and education. They can suddenly decide to take a year off from school and check out the Dalai Lama, or climb a mountain. Some may have less lofty goals, but they sometimes decide to change schools or just where they’re living. Roommate disagreements or differing habits can create the need to move to avoid major conflict. This is turnover and when roommates are involved it can cause rents to be late when one share drops out.
Property Damage: There’s not a whole lot to say about this, but students are not as concerned with property condition as the many other crucial things in their lives, like the next dance or football game. From stopped-up toilets to wall or floor damage, there are many areas of small damage you’ll need to correct. Create a strong lease agreement with clear terms about damage and who pays for what.
Neighbor Complaints: The student lifestyle varies by institution, but there’s a reason many are called “party schools.” Late nights, drinking, loud parties and other activities can annoy neighbors. This is especially true in older neighborhoods with a higher mix of long term owners co-existing with large houses filled with students.
Understanding the trade-offs for higher ROI will help you in making student housing investment decisions.
Student property investment has long been considered one of the best ROI approaches to rental property investment. However, you won’t read anywhere that it’s easy. Investing in student housing is going to take more of your time and create a few more hassles for you. The number of students moving through universities creates a higher turnover rate than any other rental property type. This higher turnover creates some other issues for the landlord.
Late Rent: Students, even those on scholarships or with well-to-do parents, are usually strapped for money for one reason or another. They are challenged with student loans and associated high fees. Students are at an age where they may also place a premium on other life experiences that may place rent at a lower priority level. You’ll spend more time in collection of late rents with students, though hiring property management out can take this off your plate.
Unpredictability: Students tend to have a shorter term outlook on life and education. They can suddenly decide to take a year off from school and check out the Dalai Lama, or climb a mountain. Some may have less lofty goals, but they sometimes decide to change schools or just where they’re living. Roommate disagreements or differing habits can create the need to move to avoid major conflict. This is turnover and when roommates are involved it can cause rents to be late when one share drops out.
Property Damage: There’s not a whole lot to say about this, but students are not as concerned with property condition as the many other crucial things in their lives, like the next dance or football game. From stopped-up toilets to wall or floor damage, there are many areas of small damage you’ll need to correct. Create a strong lease agreement with clear terms about damage and who pays for what.
Neighbor Complaints: The student lifestyle varies by institution, but there’s a reason many are called “party schools.” Late nights, drinking, loud parties and other activities can annoy neighbors. This is especially true in older neighborhoods with a higher mix of long term owners co-existing with large houses filled with students.
Understanding the trade-offs for higher ROI will help you in making student housing investment decisions.