Those considering investing in student housing can benefit from five tips from Lexington, Ky.-based Independent Rental Owner (IRO) Craig W. Hardin, who owns 37 communities with 160 apartments around the University of Kentucky.
• Location. The Golden Rule of Real Estate certainly applies to student housing: location, location, location. Many students tend to run late and are on the go, wanting to get to classes quickly. They prefer to be as close as possible to their classrooms because being two blocks closer may save them 10 minutes each way. They usually will pay more to live in a superior location.
• Lease Review. A meeting that includes all of the apartment’s roommates to review the entire lease at the time it is signed is a must. These meetings typically last about 90 minutes. Summarize the important points, including safety and security items. This review is critical because most students have never rented before and do not know what to expect. Establish the best ways for owner-resident communication, too, because students often are active late at night, which is far different from hours kept at typical real estate management offices.
• Lease Violations. Student housing leases must address every potential problem and include a reasonable dollar-amount fine that can be enforced for violations, especially as it relates to onsite behavior. If owners set the fine too high, they will be forced to threaten evictions if residents can’t afford it or fail to pay it. In these cases, neither party wins.
• Behavior. Owners should expect greater expenses when managing student housing because the owner must invest more time and money in controlling behavior. Excessive noise, parking violations, and extra trash and debris are among the things owners must deal with, especially if neighbors call authorities and fines are issued. Local neighbors’ lifestyles do not typically mix well with student lifestyles.
• Property Management. If IROs choose to manage the student property themselves, they should live in close proximity to their property. They should be prepared to make themselves available during odd hours, especially late at night, and not show that they are annoyed. Most states require property managers to hold real estate licenses. Should the IRO choose to use a property management company, they should contact their local apartment association to obtain a recommendation for managers who specialize in student rentals in their area.
Expect to pay up to 15 percent of gross receipts for the more intensive management that will be required.
Source: Craig W. Hardin is Owner of Hardin Properties, Lexington, Ky. He can be reached at 859/255-1142 or craig@hardinproperties.net.