If you happen to have investment property in Chicago or you’re thinking about purchasing a home and renting it out to college students, here’s what you should know:
The Pros of Renting to College Students
As an investor, having a property located in a college town of Chicago offers unique opportunities:
- Torrential and steady flow of tenants– A college town is home to a massive population of renters, even if only temporarily. At the start of each school year, new students start college and must find a decent place to stay for their studies.=
- Low Vacancy– In a nutshell, vacancy rates of college housing are relatively low, especially in Chicago, which is the third mostly populated city in the United States. Chicago college towns are also the third most populous in the US, housing more than 500,000 students, based on a 2016 survey by the CityLab.
- Stable and strong rental price– In college towns, rental demand is consistently high, thus making rental pricing equally consistent and strong. And more often than not, off-campus housing is covered by either the student’s college or his parents. In other words, you have a steadfast opportunity to demand a higher price for the property.
- Student-friendly area– College towns in Chicago are self-selling due to the attractive conveniences they provide students, such as:
- Accessible food establishments and shops, most of which are usually within walking distance.
- Convenient public transportation and pedestrian-friendly community.
- Student leisure. Aside from providing basic survival necessities like food and transportation, college towns are also host leisurely activities perfect for unwinding, such as museums, art exhibits, theater presentations, musical acts and concerts, as well as baseball, basketball and football games.
The Cons of Renting to College Students
While your Chicago property may be strategically located to avail of wonderful opportunities unique to college towns, it has corresponding disadvantages that you should know about:
- High tenant turnover- Students tend to stay only for short-term. You’re lucky if a tenant signs a 12-month lease, but usually they opt for a month-by-month deal.
- Vacancies during vacation season- Expect students to leave come summertime. Only a relatively few students will choose to attend college during this time, so you’ll have a three-month vacancy per year. One option for you is to ask your tenants for a twelve-month lease agreement, regardless of their intention to leave or stay during vacation months.
- Proneness to property damage- Undoubtedly, college life is the phase wherein young adults, fresh from puberty, experience freedom to explore and experiment on an almost hedonistic scale. Although not all, most college students are still immature and binge on alcohol and partying. This indifference and lack of responsibility in maintaining their living space may also be attributed to their affluent parents’ covering the rent. Unfortunately, the security deposit you have agreed on usually doesn’t come close to the actual cost of damage incurred. When dealing with college students, expect floors to get damaged, walls punctured or cracked, and doors, cabinets and windows broken.
As a landlord, you should learn about the Rents Right, which is mediation assistance for resolving disputes between landlord and tenant. For your knowledge and protection, do read Chicago’s Residential Landlord and Tenant (RLT) Ordinance.