If you are purchasing a rental property in Waco, TX, you may have considered buying a home that is close to Baylor University. While there are many benefits to leasing your rental home to college students, there are also some challenges. Below are some of the positive and negative situations that landlords face so that you can prepare.
There is a high, and stable demand for rental homes, but frequent turnover.
As long as in-person classes are being held, there will be a strong demand for student housing year after year. This is especially true if your property has several bedrooms, is close to campus, and is walking distance to various amenities. Vacancies will be minimal, and rent stable, since it is likely covered by parents or student loans.
While some college students may choose to rent the same property time and time again, most don’t, so you will be required to find a new tenant each year. Though the need for student housing is high, finding new tenants can be a taxing process, as is preparing the property for new students moving in.
One solution is offering incentives to long-term renters who choose to renew, or asking for current tenants to make a recommendation for their replacement. You can even provide a clause that allows leases to be extended for a short time period if needed, so that students have some flexibility if they choose to stay a little longer.
You can charge more in rent, but there is slightly more risk.
Very few college students choose to dorm alone, as most who rent a house look to do so with 3-4 roommates, sometimes more if the home is large enough. Since there will be more people occupying the home and rent will be split, you can charge higher rent than you would be able to do otherwise.
Note that since college students are just starting out, the typical information you would use to determine if someone is a risk to rent to simply is not there. You can ask for character references, as well as for someone with established credit history to cosign, but sometimes, that can be difficult.
Make sure your lease agreement clearly specifies all terms and conditions. It is important to collect a security deposit, and have a list of numerous emergency contacts that you can reach out to. You should also communicate immediately and take the necessary steps if rent is missed or an inspection goes awry.
Fancy upgrades aren’t needed, but you may end up having to make more repairs.
College students aren’t interested in renting a home in Waco, TX that has granite countertops, and hardwood floors. They simply want a place to live that is functional, safe, and in decent condition. A fresh coat of paint and a good cleaning is usually all the updates they are looking for.
The students you are renting to are likely first time renters. It may even be the first time they have lived apart from their parents. They may be sloppy, fail to call in a small repair before it becomes a big one, and go overboard when it comes to utility usage, all of which could result in some extra wear on your property (and wallet).
Be clear about your expectations, and ensure that your tenants know they should contact you with all repairs (however small they may seem). Explain that little repairs can turn into big issues if not addressed, and depending on what they are, could come out of their security deposit. If possible, utilities should be placed in their name.
As a locally owned and operated property management company, we have helped landlords manage properties all across Waco, TX – for college students, families, and all that’s in between. Contact us today to learn more about the comprehensive services we offer, 254-651-0576. We would love to hear from you!
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