Should Parents Buy Housing and Rent to College Students?

Posted by Teresa on August 20, 2010 under Housing Trends | icon: commentBe the First to Comment

tenantscreeningblog.comThe cost of tuition is bad enough at colleges and universities; but did you know room and board averages nearly $8,600 at private schools and over $7,000 at public schools? Parents are increasingly looking at purchasing investment property for their kids to live in, and then to rent when the child graduates.

There are several advantages to this option:

1. Purchasing offers tax benefits that are not available when paying college room and board. The interest paid on a mortgage is usually tax-deductible; college room and board is not.

2. Owning rental property offers parents additional tax benefits, with deductions for taxes, repairs, upkeep and depreciation. Travel to inspect, purchase and check on the property is also deductible in most cases.

3. Avoiding the housing shortages that many universities are experiencing—along with the steep fees that go with them.

4. Moving a student’s possessions back and forth can be either a time-consuming hassle or a storage nightmare. Keeping it in one place year-round is much more convenient. It can save parents time and money.

5. Whether parents purchase single-family homes, condos or duplexes, there are opportunities to collect rent from other students. A multi-bedroom house means roommates—and rents. A duplex can provide additional income while providing a student a place to live year round.

There are downsides to becoming an absentee landlord, too. All factors must be considered, but owning rental property while the kids are in college is a great choice for many families. Learning all about becoming a landlord is essential, and should include visits to a lawyer and tax advisor. Property buyers should check all the applicable leasing codes in the city and state where the property would be located, and always conduct proper tenant screening on all residents. (You may decide to exempt your own child.)

The contents of this article are intended for general information purposes only, and should not be relied upon as a substitute for obtaining tax advice applicable to your situation.

Renting to College Students: Landlord Dos and Don’ts

Posted by Teresa on July 14, 2009 under Landlord Tips, Tenant Credit Checks, Tenant Screening & Background Checks | icon: commentBe the First to Comment

college-students on Tenant Screening BlogIn a college town, chances are you could fill your rental properties with students if you chose to. What are the advantages and disadvantages of leasing to college students? What should you look out for?

Students can be good tenants, or bad tenants—just like the rest of the population. They are also willing to pay top dollar in many cases. If you are clear with college students and let them know your expectations, you can be a successful college student landlord!

Since the new school year is coming up quickly, here are some Dos and Don’ts for considering student tenants:

1. Do make sure you have an iron-clad lease. Have a lease or real estate attorney draw it up for you.

2. Do specify that each individual tenant is responsible for the entire rent. Then, if one moves out, the remaining roommates cannot claim they don’t that person’s share.

3. Do remember that the security deposit won’t cover the potential damage that can be done to your property. Make sure the lease assigns responsibility for damages and losses.

4. Do consider the extra maintenance or repair costs when establishing your rent. Repainting, and replacing carpet and more often, as well as repairing damages, should be considered standard operating procedure.

5. Do specify noise restrictions in the lease. College students like to party, and even small gatherings can become out-of-control in no time at all. Let your prospective student-tenants know that if the police are called to your property due to noise complaints, it is grounds for eviction.

6. Don’t allow “squatters.” If your tenants want to have overnight guests, enforce a 7-day (or however many you deem reasonable) limit.

7. Do specify lease dates: is the lease period for the school year or for a 12-month period? Students might think “one year” means August – May! Be sure the tenant knows the number of months they are responsible for paying rent.

8. Don’t allow anyone who is not on the lease to live in the rental unit. Period. You have no protection against their actions if they have no binding lease agreement with you.

9. Do prescreen all applicants to verify employment history, criminal history, and credit history.

10. Don’t allow the students alone to sign the lease. Require co-signers, such as their parents, and conduct proper credit screening on co-signers, as well—before you offer to lease your property.

11. Don’t hesitate to call the co-signers/parents at the first sign of trouble.

12. Do keep the communication open with your tenants—if they’re late, follow up immediately, from day one, to break bad habits. And, if they’re respectful, clean, and quiet (hey, it could happen!), let them know you appreciate it.

13. Do check your local zoning laws for maximum number of residents allowed in a housing unit—but if you follow suggestion #1, your lawyer will know for sure!