The Pros and Cons of Investing in Student Rentals

If you can remember your own student days, you might be apprehensive about investing in student rentals.

Many students use their rentals for everything else under the sun except for studying. Whilst this is an exciting time in any young person’s life, it is not always as exciting for the landlord.

When investing in student rentals, you should always weigh up the pros and the cons. There are risks involved but there are also several benefits to owning student accommodation.

Here’s what you need to know. 

The pros of student rentals

#1 – Higher returns on rentals

Student accommodation is usually rented out per room instead of the unit as a whole. This means that the return is so much higher for the landlord.

Students are not very demanding when it comes to the physical aspects of the property. They are mostly concerned with the distance to and from campus and the safety of the unit.

As long as there is a common area, a kitchen, and entertainment areas, students will be happy with it.

Be sure, however, not to push the rent up too much for many of them will not be able to afford it. 

#2 – Rentals result in fewer vacancies

Universities offer residences but these are often very expensive. Parents, guardians, or the students themselves can get into serious debt trying to cover the cost of the residence per year.

This is where private student rentals save the financial lives of many. Student rentals are not as expensive and there is usually a great demand for them.

Most of the time students will rent the same unit for the duration of their degree. This means that for the next 3-4 years, you won’t have to worry about finding anyone to fill an empty rental unit. 

See also: 5 Top Tips For Rental Property Owners

The cons of student rentals

#1 – Student rentals are not always well-maintained

First-year students are basically still teenagers and the transition from their parental home to living alone can be challenging.

One of those challenges is maintenance. Not all students are known for keeping a tidy house so as a landlord you need to anticipate this.

Many landlords hire cleaners and work their fees into the rent. This way the house stays clean and well-maintained most of the time.

You can also consider hiring a house manager who checks up on the students and identifies any wear and tear that might have occurred since they moved in.

#2 – Damage to property

With the partying and entertaining that might go on in the rental, property damage is always a possibility.

As with any rental, landlords must ensure that students put down a deposit before moving in. This will cover any damage that might occur during the student’s stay.

Make sure that a parent signs as the person responsible for the rent or as a witness.

You can also lay down some house rules that you and the student agree upon. This opens up clear communication from the start and both parties know what to expect from one another. 

See also: 5 All-time Best Tips for First-Time Property Investors

#3 – The academic year might lead to an empty unit

The academic year usually runs from February to November with December and January being holiday months.

Many students go home for the holidays and then the rental unit will remain empty. This can be problematic for several reasons.

The first is that the student might not want to pay the rental amount because they won’t be living there. Make sure that you include these months in the rental agreement upon signing.

The second is that the unit might be vulnerable to break-ins. You might have to patrol the unit every day or get someone to manage it in the holidays. 

Student rental units can be excellent low-risk investments. Before investing, however, make sure that you have thought of the cons and that you are clear about how to handle any challenges that may arise. 

See also: 5 Common Disputes Between Landlords And Tenants

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