What are the Pros and Cons of this Tenant Market?
Is your rental property near a university or college? If it is in walking distance, even better — you will have students lining up to fill your units. As tenants, students may be an ideal choice for you. As with everything, there are pros and cons. Read on to find out whether this is a niche market that suits you.
Professional tenants, who move into a rental unit and then stop paying rent after a month or two, have studied well how to cheat landlords, and the system. They are not found studying at university or college. Students, however, are spending a lot of money to further their careers and better their lives. Their future does not involve a bad credit rating or debt. They are motivated and respectful of authority and more likely to view a lease as a real contract. This d
oes not mean that they are angels, or won’t have parties. But their future plans don’t involve milking the system, and do involve becoming responsible adults, so your chances of getting a pro tenant are pretty well zero.
Students tend to move fairly frequently, and there is a rhythm to student tenancies. Universities have a shortage of dorm rooms, so after first year, students have to move out of residence. There are a lot of 2nd year students searching for May 1st accommodation and if there is a good fit, you may have a group of students for the next 3 years of their schooling. Others move back home for the summer, and then are on the hunt for a Sept. 1 tenancy, so these two months are the peak times for move-ins. This also means that finding students for other times of the year is more difficult. Fairly frequent moves mean that there will be more upkeep to your unit as you more frequently ready it for new occupants. The upside to this is the ability to adjust the rent, between tenants, to market conditions by not being locked in with a long-term tenant. It also means that if you intend to sell your building in the near future, it will be much easier to offer vacant possession.
If students are moving out of dormitories into your rental, it means that you are their first landlord and it will be the first time they are independent of their families and the school system. They will have only their parents and the university as past landlord references. You can find out from the residence office and the dorm floor captain if there were any behavioral issues with the student. As the first time out on their own, it also means a number of other things: you may get a midnight call that the smoke detector is beeping, and you run over to find that the batteries merely need changing. You may need to turn down a request to change the light bulbs. Groups of friends that move in together may not get along as roommates, and may try to involve you in their interpersonal dramas, or want to move out be fore the end of their lease. And before calling the plumber to figure out why the dishwasher apparently isn’t working properly, check to see how they are loading it — chances are they are putting bowls over the central tower, blocking the water. Changing furnace filters and dryer lint traps, and recycling/composting/garbage takeout may be new to students, so expect to do a little life training.
Students are generally not working enough to support themselves and are most often supported by their parents or by receiving OSAP (gov’t loans for students’ education + living expenses). This means that a credit check won’t turn up much, if anything, so you won’t have any idea how responsible they are with money. You can get their parent/guardian/relative to sign a Guarantor of Rent form. This is not the same as having the parent on the lease, and the parent does not become your tenant. The G of R form is a document stating that the guarantor will be responsible for the student’s bills if the student doesn’t pay the rent. You should do a credit check on the guarantor (with their written permission), to confirm that they have the ability to cover any debts that they are signing on for.
With students sharing an apartment, your lease options are either to put all on the lease, or have only one person on the lease. If all students are named, then there is more security for you if there are damages, as there are more people/guarantors who can be held responsible.
However, with students there is also the likelihood of one of a group wanting to move out and the others wanting to stay, or some of the group wanting one of their roommates gone, but not being able to evict that one person. If there is only one name on the lease, then that person is able to get rid of the troublesome co-tenant, or find replacement roommates without having to ask to have the lease changed to a different set of names.
It’s a good idea to go over the lease with the students, point by point, and clarify all items. They may want to paint walls in non-neutral colors (read: purple, red, green….) so if this is not allowed, point it out and have them initial the lease at that paragraph. They may think 30 days’ notice is required to vacate — let them know that it’s actually 60 days. Point out that if smoking is not allowed, that also applies to their visitors.
Craigslist and Kijiji are good places to advertise your vacancy. Universities also have housing offices, with on-line databases where you can post your vacancy. All of these will attract scammers looking to sucker landlords with offers from supposedly overseas students who want to send you a money order, so beware. There are also specific departmental on-line bulletin boards — if you want a mature grad student or a medical student, find the appropriate on-line resource for that.
If you have a short-term Toronto vacancy, for example during the summer, then search out the housing registry for the University of Waterloo, McMaster’s, Dalhousie and others that offer a co-op program. Coop students usually do one semester of studies, then one work placement for the following semester. Then they return for another semester of studies, then go to another work placement. They start the search for housing 2 months ahead of time, once they receive their placements, although some students get last-minute assignments. The U of Waterloo has the biggest coop program, and it runs 12 months a year with no summer break: Sept-Dec; Jan-April; May-August. Downtown Toronto is the usual destination, but Mississauga and other areas offer 4-month student jobs as well (with the occasional 8-month placement). The coop placements are paid market rate, and the students are working responsibly in career-oriented jobs. Their preference is for furnished accommodation. It’s a good way to fill a summer vacancy with a working student, and then be ready for a new student group in September, or even offer housing on an on-going basis on a 4-month basis. While the RTA allows for tenants to continue their tenancy even once a lease ends, that’s not an issue with coop students who are constantly rotating.
For some landlords, a constantly rotating roster of student tenants and the accompanying hands-on attention that is sometimes required is more work than desired. However, there are attractions to renting to students: flexibility, financial pitfalls avoided, and the interaction with the next generation. If your personality and landlord style are suited to student rentals, don’t be afraid to explore them.