Greetings Real Estate Investors!
It’s September, football is back and in South Florida it will start getting cooler in about a month. And as much as our amazing winter weather helps our rental properties there is actually one other thing about September that could be even more valuable to your bottom line…college students. Yes they drink a lot of beer but they also are consistent tenants who often have parents who are happy to make sure the rent is paid on time. So there are some disadvantages to renting to college kids but they are greatly outweighed by other factors. Lets take a look at both sides and we think you will agree that you should have some college rental properties in your portfolio.
The main advantage to these properties is that most colleges continue to grow and raise tuition rates. Expansion means more administrators, more professors and more students. This means that the neighborhoods around a college tend to increase in value at a faster pace than other areas and tend to hold their value stronger during market downturns. Our two main local universities are the University of Miami and Florida International University. Homes are UM have continued to appreciate in value even though many of them are located in Coral Gables which already demands high prices for homes. Now FIU is joining the trend the trend as they are aggressively expanding. Each of these local markets have seen increased appreciation over similar areas that are not near the campuses.
Pro: Guaranteed Need
College students have to go to school and they have to be near campus or their life is a nightmare of traffic. This means that each year you will have a new set of tenants who really need to get housing near their school. Of course there is a flip side to this because they also do not need to be there for the summer, however the range of students that will rent a home is typically more upperclassmen who tend to stay during the summer anyways, and if not you can just work in to the lease that the entire year has to be paid.
Pros: Secured Payments from Parents or Multiple Roommates
Many units are actually paid by parents or at the very least are backed by parents who do not want to see their kids end up with an eviction on their record. In either case you definitely want to find out who will be paying the rent and if it is not the parents then you just have to be bit more strict on the credit, employment and background checks. In cases where you have multiple roommates, even if one roommate is unable to pay rent the others will quickly find someone to take their place so as to not risk losing their rooms.
Con: Crazy College Kids
Yes college kids like to party and tend to do less then advisable things, but many regular adults are the same. As long as you require ample security deposits and have regularly scheduled inspections of the property by an experience property management company (we know of a great one) then you should be able to minimize and possible damages and still reap the rewards of a property near campus.
Con: More Turnover
While it is true that you will probably not have a consistent tenant over a long period of time, that is also not necessarily a bad thing, remember it can be more of a fight to raise market rent with an existing tenant, whereas when you are renting to a new tenant you can set that price at what the market demands and reasonably expect to get a new tenant.
We are a big fan of college area investment property, we feel the pros outweigh the cons especially over the long term. If you would like more information on this or any other income property questions, please call us at 305-517-3900.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.