Should You Own Rentals in College Towns?


Should you own rental homes in college towns? More specifically, rentals in areas within walking/biking distance of a college or university?

I know someone who did this for a year.  Here are some true confessions:


The main benefit?  Big returns.   Why?  College areas are the one location where you can rent a home by the room and not have anyone think its weird.  In fact, they may think its a benefit!

Think of a large home.  Consider a duplex; one side has 5 bedrooms, the other has 3.   Normally in the area you might have rented the 5 bedroom side out for maybe $2000 per month and the 3 bedroom for $1500.  But by renting them out by the room, you could get roughly $350-400 per person.  There could be 8 students in the 5 bedroom, translating to approximately $3000 per month.  There could be 6 students in the 3 bedroom, which is roughly $2100 per month.  Utilities are added on top of this rent.  In other words, instead of $3500 per month, because of college age expectations of room sharing (to keep rent costs low), you can get more like $5100. That is a nice bump.

And that my friends, is the main (and only) benefit.  At least in my view.


Let’s start with ‘herding cats’ since that is what its like to manage a home of college aged people.  I suggest you have someone on site to act as a sane representative of the owner.  Otherwise, this can get away from you.

But working with college students can be ‘interesting’.  Many have very ‘unique’ ideas about how contracts work (Either they have no concept and think they can just leave if things aren’t working out for them, or they figure they are junior attorneys.  Neither are attractive).

And think about collecting rent from 14 people.  Or the logistics of signing 14 separate rental agreements (if you don’t?  good luck at collecting your rent if they decide to walk unless you have Mom and Dad co-signing…which is an excellent idea).  My favorite part?  The fact that many college aged men and women are at that ‘treat me like an adult I know what I’m doing and all adults are out to hold us down’ type attitude.  That is a real party.

College students are also not famous for their cleaning skills or respect for property.   Not saying this is ALL college students, but by far the average is what all the stereotypes lead you to believe.  There is alcohol, smoking, drugs (oh, you have a strict no smoking or drugs policy?  And you will enforce that how?).  Expect there to be ‘maintenance issues’ if you rent to students consistently.

All this (could) be helped if you had one of your own children actually living on site to ride herd.

There is no such thing as reward without risk.  The rewards of big cash flow are here with college rentals like in no other area.  But you better be ready to manage your assets because that return comes with some baggage.  You just need to be mentally ready to handle it.

Here’s another perspective on renting to college students


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