The student housing market can be rewarding to pursue as a housing provider. Thanks to the ongoing demand for affordable student housing, there’s potential to earn a steady rental income. However, renting to students comes with unique challenges, so it’s important to understand what you’re getting into before advertising your property.
In this comprehensive guide, we’ll cover everything you need to know as a landlord renting to students, from tips to attract student renters to tenant screening strategies that work for this unique demographic.
Understanding the student rental market
You might wonder if operating student housing is a financially savvy move. The answer is “yes,” according to a wide range of student rental market studies.
Student housing demand in the U.S.
The demand for student housing in the U.S. is expected to rise significantly in 2024 and beyond, due to a growing pool of post-secondary applicant:
Student housing demand in Canada
Our data shows that demand for student housing has grown since the pandemic, and the outlook for the student rental market in Canada continues to look promising:
Attracting student renters
When you enter the student rental market, you’ll be competing not only with other property owners, but also with college dorm rooms, which offer many enticing features. Therefore, it pays to know what factors students value:
Location
A convenient location for students means two things. The first is proximity to their campus, preferably within walking distance. The second is a wide range of local amenities, such as shopping centers, restaurants, laundromats, grocery stores, and public transportation. If your property checks both boxes, your rental will command attention from students.
Basic furnishings
Students, especially those from abroad, will appreciate a living space that offers basic furnishings, like curtains, chairs, and a dining table. By supplying these items, you can save them the money and hassle of buying them on their own.
In-unit amenities
The more amenities your property offers, the more interest it will garner from student renters. Appliances like microwaves, washing machines, and dishwashers are sought-after features. Other perks are balconies, air conditioning, storage space, and shared facilities, like a gym or swimming pool. A personal parking space is also highly coveted by students.
Safety
Safety is a critical concern for a student tenant, especially if this is their first time away from home. Secure your rental property with deadbolt locks, smart doorbells, alarms, and cameras.
Flexible lease terms
Many students value flexible lease terms that align with their academic calendar. The standard one-year lease may discourage them from applying to be your tenant, so consider offering a month-to-month lease.
Privacy
A noisy and chaotic dorm doesn’t appeal to all students—some people want peace and quiet. Market your unit as a cozy, calm living space with extensive amenities to appeal to those renters.
How to price a student rental
Here are some things to consider when setting your rental price to ensure you attract quality student renters while staying competitive and profitable.
Student budgeting
Many students may rely on fewer financial resources to sustain their lifestyle while studying at college. That means they cannot afford to splurge. Put yourself in their shoes to understand how much rent they can afford. Be fair in pricing, but ensure their rent-to-income ratio is manageable (no more than 50%) to limit your risk.
Local market demand
Location is a crucial factor in rent pricing, and student rentals are no exception. For example, suppose your property is near a busy campus. In that case, demand will skyrocket as the academic year approaches, so you can justify charging a higher rent fee. It’s also important to assess the average rental rates in your neighborhood for properties that resemble your own. If your asking rate is too high, you’ll discourage students from applying to be your tenant.
Lease duration
What type of lease term are you willing to accept? Let’s say the local student rental market favors month-to-month leases. In that case, charging a higher-than-average fee is wise since your property may be vacant for part of the year. If a student is willing to sign a one-year lease, you can charge a lower price, as you’re assured a recurring income for 12 months.
Roommates
Can your rental property accommodate more than one tenant? If so, there’s a good chance more than one student will express interest in living there. Since each tenant will be responsible for only a fraction of the regular rent, you can comfortably charge a higher fee per student.
Co-signer
When negotiating the price of rent with a potential student tenant, ask if they would be willing to have someone co-sign the lease agreement. Given students’ limited credit history and income, a co-signer provides an extra layer of financial security, which you can consider when setting your rent price.
The benefits of renting to students
There are many reasons why landlords find student housing rewarding:
Steady income
As long as universities and colleges stay open, there will always be a need for student housing, especially considering that most students will prefer to live in a private rental near their campus. And that continuous demand translates to a dependable rental income.
Potential for higher profits
You can often charge a premium for rent if your property is in a highly desirable area, preferably near a college campus. The demand for quality student housing will spike as the academic year approaches, helping to boost your profitability.
Lower vacancy rates
A combination of steady demand for rental units, referrals from past students, and university housing assistance programs will help you land a student tenant fast. And since young people are tech-savvy, they can quickly find your rental ad online, allowing you to set up interviews immediately.
No-frills living spaces
Most students are willing to consider various rental opportunities. They usually value convenience and a budget-friendly lifestyle, so they can focus on their studies and enjoy the social aspects of college life. As a result, there isn’t a great need for you to invest in pricey amenities and property upgrades.
The challenges of renting to students
Despite steady demand, the student housing market isn’t ideal for every landlord or property owner. Here are some of the main drawbacks of operating a student rental:
Lack of credit history
Students likely have little or no experience managing credit and paying bills. As a result, evaluating their ability to make timely rent payments and overall financial stability is a challenge.
Money management issues
Shrewd money management skills come with experience, which young people lack, given their age. They’re more likely to overspend and rack up debt. As a result, there’s a greater risk of student tenants falling behind on rent payments.
Higher risk of property damage
As with money, students may be inexperienced with caring for a home, leading to garbage piling up and hazards such as grease fires. Through carelessness or ignorance, they may cause
Disruptive behavior
It’s not uncommon for students to throw wild parties, play loud music, and stay up late at night, which can aggravate your neighbors. Complaints and arguments may ensue.
While it’s wise to consider these pros and cons as a student housing provider, every renter is unique and every tenancy can involve unexpected situations. Learn more about the risks and rewards of renting to students.
Screening student tenants
Screening students is no different than screening any other tenant, with some exceptions.
Pre-screen with the right questions
Ensure you ask relevant questions to ensure the potential renter is a good fit. Find out about their move-in date, income, the number of people living on the property, and whether they require special amenities or accommodations. Remember to avoid asking questions prohibited by local human rights laws.
Get supporting tenant screening documents
Make sure you get the rental applicant’s permission to run a credit check, and ask for past landlord and employment references, if applicable. Gather as many documents as you can to verify crucial details. These include pay stubs, bank statements, and phone bills. Students from abroad should be able to prove they are legally allowed to enter and study in Canada—ask them to provide proof of a study permit.
The importance of a guarantor
You may have limited information to go by during the screening process: many students have a sparse credit profile, little to no employment history, and few credible references. Reduce your risk in other ways. For example, you can ask for a guarantor on the lease agreement, and explore guarantor services for renters, like SingleKey’s Tenant Passport.
Screening international students
Knowing how to screen international student renters can be challenging, given the difficulty in obtaining foreign credit data. However, you can easily access and evaluate a rental applicant’s credit history from their home country with tools like SingleKey’s International Credit Check.
Our final thoughts
The student rental market is poised for robust growth, thanks to a steady enrollment in post-secondary education and a shortage of suitable rental units.
The key to succeeding with student renters is understanding their unique preferences and concerns, most notably affordability. Doing so will allow you to position your property to stand out among the competition and attract the best student tenants.
Knowing how to appeal to your target market is essential to a thriving rental business—but so is tenant selection. Ensure you have a robust tenant screening toolkit to help you land the quality renter you deserve.
