Rental properties located near colleges and universities often are lucrative investments. Landlords enjoy a steady stream of prospective renters but leasing to students or inexperienced tenants is not without its challenges.
Students tend to be young — 18-22 — and living away from home for the first time. These renters tend to be inexperienced with respect to both the legal responsibilities of a tenancy agreement and the practical aspects of renting. They have yet to reach their full income potential and may be living hand-to-mouth, often with roommates to offset expenses. And these tenants tend to be very, very busy.
Students are good teachers. Nothing exposes the holes in a landlord’s property management policies like renting to inexperienced tenants.
But the fact is, students are no different than other tenants, and the best strategy is to treat these renters the same as others. If you want student renters to act like adults, then don’t treat them like children:
Flexibility is Key
Landlords with properties near colleges should be thinking in terms of “allowing” students to apply for vacancies, not targeting students or renting to them exclusively. Rental ads should avoid “perfect for students” or “student rentals” as these terms can be viewed as discriminatory, particularly to families with younger children. Perhaps a professor also would like to live close to the college. A landlord can’t tell a parent with three kids that he or she can’t rent an apartment that previously housed four roommates.
There is no such thing as a “student lease” or “student rental” when it comes to private, off-campus housing. Whatever concessions are provided to students also must be made available to other tenants. The tenancy agreement should provide all the flexibility necessary to rent to anyone, including rules for noise and other disturbances, proper use of the property and so on. The lease must be easy-to-read and cover anticipated situations.
Landlords planning to rent to students should not place unrealistic demands on tenants. Tailor the lease with flexible terms, like allowing the option of renting for three, six, nine or twelve months to cover most situations. Demanding a full-year lease from reluctant students does not guarantee the tenants will stay, take care of the property, or pay rent for the final three months. That’s true of any tenant. Working out a compromise with a tenant who can’t lease year-round might yield better results.
Outdoor maintenance of the rental property is difficult for most tenants, even those who have time. Don’t require lawn mowing, manual watering, snow shoveling and so on if that is not practical. It can wind up being a losing battle that only causes frustration, animosity and property damage. Also, it may be discriminatory to look for a tenant who can perform those tasks and reject others who may have physical limitations.
Income Verification and Rent Payments
Income verification should be handled the same way for each rental applicant — the applicant completes a rental application listing the source of income and provides sufficient documentation to confirm that income. If student renters are anticipated, a landlord may want to allow for a co-signer in the case the tenant lacks the income or the credit history to rent on their own. The applicant can provide information on the co-signer in the application under consideration. If this option is offered to students, it also must be provided to other renters in similar situations like a tenant with a new job or a long period of unemployment.
Co-signatories are an easy strategy for overcoming income hurdles. The co-signer will have legal liability only if the tenant defaults, but in that event, the landlord has the equivalent of a lease guarantee.
Rarely, landlords will include a parent or other responsible party as a co-tenant on the lease. That makes the parent equally liable for the rent payments, but it also confers other legal rights, like the right of possession. A parent may decide to stay in possession on a holdover or sublet the property. In the event of a breach of the tenancy agreement, the landlord would have to legally evict both the tenant and co-tenant and that might trigger a protracted legal battle. Also, there may be ramifications for the co-tenant, like problems refinancing or obtaining a mortgage when the lease lists a different permanent residence.
Report Rent Payments
As with any tenant, landlords should sign up to Report Rent Payments. This is the best way for first-time renters to build credit. After paying on time each month of the lease term, the tenant leaves with a Certificate of Satisfactory Tenancy to show to the next landlord.
Signing up to Report Rent Payments also provides incentive for an established co-signer — someone who doesn’t want to ruin a stellar credit record — to keep in touch with the tenant regarding rent payments.
Both the tenant and co-signer should receive the Notice to Tenant which explains the benefits and consequences of the service. This Notice should also be incorporated into the tenancy agreement.
Screening Tenants with Little or No Credit
As with all rental applicants, with students it is important to verify the person’s identity so that the tenant screening reports are an accurate match. This prevents an individual from using an alias or hijacking someone else’s credit report or references. Run a tenant credit check on the applicant even if the person is young. Little or no credit is one thing. Bad credit is another.
Also, be sure to screen the co-signer. Have this person complete a rental application and sign the consent to a background check. This is the person who purportedly possesses the income and credit to pay the rent. Verify it. You don’t want a co-signer who needs a co-signer.
Landlords can rely on a co-signer to pay rent if the tenant defaults, but not to manage the tenant day-to-day. Landlords need to remember they are dealing with inexperienced renters.
Be prepared to educate students (and all tenants!) on the responsibilities under the lease. A first-time renter will be oblivious to things that might seem obvious to the landlord, but that’s true of other tenants, too. This starts with the leasing process. Explain that the rental application can’t contain fraudulent statements, and that the lease is a legal commitment and the consequences for breaking it will follow this person around for years.
The lease-signing process is a great opportunity to reiterate house rules and assist tenants in understanding their day-to-day responsibilities. An orientation on move-in day is instrumental in extending the life of appliances, reducing complaints, and keeping the property safe. Tenants should understand what to do in case of an emergency, and how to report conditions on the property like pests or crime.
Even if students or first-timers already have moved in, it’s not too late to jump in and actively manage the property. That can be as simple as communicating regularly with tenants so they are reminded that someone is in charge.
With students, there is a tendency for landlords to micromanage. Surprise raids to see if units are clean (a landlord did this) might work in the military, but not with tenants. They are adults, not children, and all tenants have a right to their privacy and quiet enjoyment.
Be a Mentor
Be a good landlord to first-time tenants. Be responsive: answer phone calls, make repairs, settle disputes. Reward tenants when they do the right thing and challenge them when they don’t. Active property management prevents rent defaults and property damage. And good service is rewarded with good ratings and reviews and will have great tenants lining up for the opportunity to live at the property.
Don’t Underestimate Students
Don’t take advantage of student renters. Students may be a vulnerable population, but they have savage defenders. No one wants to fight with angry parents or zealous tenant advocates who only see one side of the story and pursue legal action or bash the landlord’s reputation.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
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Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.