In an article we read by Amy Wolff Sorter at GlobeSt.com, the student housing sector has become a rather popular one in which to buy and sell due to rising enrollment rates and diminishing supply of on-campus options. To get an insider look at some of the other draws (and disincentives) for landlords, property owners, and investors when it comes to student housing, we spoke with RI student property manager, Diane St. Laurent.
What do you believe sets student housing apart from other types of investment properties?
As an investor, student housing is desirable because rent payment is reliable especially when the landlord has the parents of the student secure the terms of the lease. Another positive is that demand for student housing is always high.
Is there an advantage for investing in smaller scale properties for student housing versus larger scale properties?
When the landlord can establish a relationship with the students, so open communication can exist, then problems as they arise can be easily resolved. Building communication is easier with smaller properties. Large properties can impact the landlord-tenant relationship that is so important to build trust and mutual respect.
What amenities do you think are essential for student-leased properties to offer?
A fixed rent price that includes utilities is beneficial, if possible. This helps students manage their finances and ensure the property is being maintained in terms of heat and electricity.
Students sometimes require furniture to be supplied, so if basic bedroom furniture, living room and dining room furniture are supplied, the number of prospective students may increase as a result. This opens the door for exchange students from different countries and/or out-of-state, because these students may not be able to travel with this type of furniture.
What would you say is appealing about investing in student housing?
Steady increase in student demand.
What would you say is unappealing about investing in student housing?
Some undergraduate students (freshman, sophomore, junior) are not really ready for this type of responsibility. Student choices usually reflect in them not taking care of the property; additionally, their social lifestyles sometimes lead to damage to the property and them being a nuisance to the neighbors.
What are some of the pitfalls associated with student housing?
When the landlord and student’s expectations, regarding respect of the property, are out of sync.
How do you believe the recession has impacted these kinds of investments?
My experience is that supply and demand has changed related to rent prices. On one hand, there is an increase in student demand, but at the same time, students have fewer dollars to spend on rent. There is a lot of competition for investors of student housing. First, on-campus housing (dormitories and university apartments), private on-campus housing, off-campus housing, and finally student computers.
It comes down to what the student can afford and the individual student behavior. Essentially, what are students looking for in housing? This places added pressure on the investor to find ways to differentiate their property from all the rest. Additionally, what student market the investor is looking at targeting has to be answered as well.
Do you believe that making an investment in student housing is worthwhile?
Yes I do. It needs to be managed as a business, but at the same time, investors have to embrace the responsibility of helping students make good choices so they can assimilate to independence, maturity and advance their knowledge all at once.
What should property owners and investors know when it comes to owning and investing in student housing?
Students are young adults finding their way to independence, and sometimes their lifestyles are incompatible with the expectation of the landlord and the rules of the house.
What are some difficulties you often encounter when interacting with student tenants?
Sometimes the student is just not mature enough to be living in something other than a dormitory.
What are some important things to consider when interacting with student tenants?
Take on the mentor role by treating students as adults and hold them accountable for their decisions.
With that being said, I would emphasize student safety as the top priority. This means landlords should have house rules documented, fire alarm inspections, routine heating and electrical system maintenance checks, and door locks changed between tenants.