by Albert Fontenot January 28, 2015 In the city of Charleston, owners of investment property are enjoying a unique and profitable opportunity. Rising home prices mean better economic opportunities in the form of greater equity, higher rents, and potentially huge profits if the house is ever sold. The housing situation with the area's college students is one of the major factors that is driving the high rents. Let's take a quick look at each college –
- The College of Charleston – C of C had a total enrollment of less than 500 until it became a state institution in 1970. Now, the school averages nearly 11,500 students, but only owns sufficient residence hall rooms to house a little over 3200 students. Current rates are between $633 and $1087 per month.
Obviously, what this means is that the vast majority of students at "the College" will need to seek off-campus accommodations. And, because they are given the power of choice, they will be looking for something better than the double or triple-occupancy rooms offered by the school.
- The Medical University of South Carolina – Established in 1824, MUSC is the oldest continually-operate medical school in the Deep South. The school has expanded into a campus with six separate colleges, a public hospital, and a medical research facility. However, there are no housing facilities for the more than 2500 full and part-time students.
- The Charleston School of Law – Located in the “Upper King Street” district, the Charleston School of Law was established in 2003, thanks to the efforts of five prominent Charleston judges and attorneys, and is the city's first modern law school. Current enrollment is approximately 600 full and part-time law students. According to the FAQ’s on the school’s website, the Charleston School of law does not provide student housing.
Do the math. That means a potential renter base of over 11,000 possible tenants, all mainly looking for housing on the Charleston peninsula. This number represents a very significant of the peninsula's total population of approximately 35,000. In your ever-ongoing quest to always have continuous occupancy in your properties, the college student market is an often-overlooked demographic that you can target to your prosperous advantage. There are a number of advantages to focusing on renting to college students –
- Higher Rent – According to Rentometer.com, in the zip code 29424, that of the College of Charleston, the average monthly rent for a three-bedroom house is $2122. Around MUSC, zip code 29425, the rent can be up to $2500.
Compare that to North Charleston, where a three-bedroom home will only cost $803 per month, on average.
- Advance Payments – For the sake of convenience, many parents prefer to pay upfront for an entire semester, rather than writing checks each month or sending the money to their children in the hope that they will be responsible enough to pay their rent.
- Dependability – Most college students have their living expenses underwritten by the parents, who themselves are typically more financially stable.
- Lowered Tenant Expectations – In general, current students tend to be less fussy about their accommodations and other types of tenants. This makes life easier for you, because they do not usually expect to have the most modern, top-of-the-line appliances or the most fashionable decor. Functionality and convenience to the college lifestyle are far greater selling points.
- Targeted Listing – The local colleges allow approved local landlords to advertise on their university's website. It is also a great idea to run ads in the school's newspaper and post flyers at the student union. Because there are so many students and so few on-campus options, you have a virtually captive audience.
- Immaturity – For many college students, this may be the first time that they have ever lived on their own. This newfound freedom can often lead some students to make bad choices in your rental home.
- Financial Irresponsibility – College students are taking their first steps into responsible adulthood, and usually have basically no experience in paying their own bills on a regular basis. Up until now, they have always had the safety net of Mom and Dad.
- Wear and Tear – Because renting to a college student is, by nature, a short-term agreement, students in general can be physically harder on the premises than other types of tenants.
- Neighbors – As a general rule, college students tend to keep later hours and throw more parties than the typical tenant families. This sometimes means that neighbors can be unnecessarily disturbed.
- You should have a specially-crafted a lease that addresses the unique challenges presented by student renters. Some suggested clauses could set parameters on guests, maximum occupancy, parties, damages, repairs, and noise.
- The lease should include both parents as cosigners, even if the student is not a minor. Likewise, you should perform your regular tenant background checks on the parents as well, since students probably do not have rental histories.
- You should always check to see if the student has ever been evicted from campus housing.
- Although it may be tempting to offer "all bills paid" as an attractive amenity, you should consider having the student residents pay their own utilities. Left unattended, the student tenants can cost you hundreds of dollars when they unconcernedly leave the air conditioner on all day. At the bare minimum, set limits with penalties for any overages.
- With college students, it is often necessary to include "out-of-the-box" rules. Examples of this would be the prohibition of fireworks, gas or charcoal grills, candles, BB and paintball guns, underage drinking, etc.
- Make it a practice to stop by in person to check up on the premises regularly and often.
Charleston has a higher-than-normal population of college students without appropriate on-campus accommodations. This wealth of potential tenants can provide regular occupancy and income, if you properly focus on the demographic while at the same time installing the necessary safeguards.