I've own a Philadelphia Property Management Company (Grow Property Management) that manages college student rentals for 12 years and we currently manage about 50 units (SFHs and duplexes, mostly) within a 3-4 block radius around Philadelphia Universities. We have rented to close to 1,000 students since we began managing student rentals, for landlords and wanted to offer some insight. It's my belief that because of the age, maturity level, number of decision makers (parents & their child) that it is one of the hardest niches in buy and hold investing. I have several landlord friends that have tried to rent to students and said "never again." . Philadelphia student housing rentals can certainly be profitable but they can also be a PITA. You have to remember these students know nothing and a lot of them have been babied or coddled their whole life. At Grow Property Management we have gotten texts at midnight, 4am that someone is peeing behind their house or that there is a mouse in the house. I've had students tell me their heat is not working and they never turn on the thermostat, etc, etc. In their defense, college kids have no idea what the real world or business hours are like. They’ve usually never lived in their own place before and their expectations are all over the place.
But it can be done and done successfully
As I see it there are 4 major reasons why you'd want to rent to students:
Related: Is Philadelphia Student Housing Still A Good Investment?
1) CASH FLOW:
Philadelphia students pay a whole lot more than non-students. In my estimation, somewhere between 20-100% more. We manage a SFH home with a cost basis of 60k that rents for $1725, a 170k duplex that rents for $5,000, and a 90k that rents for $3,500. The property landlord pays no utilities and these are all one year leases. 99.9% of the responses to my properties are students. The price + location + the start date is typically only something a student would want. We do occasionally have families or professionals that come to look at our properties, but they realize they can get a much cheaper place a little further out from campus. You can get a pretty nice 1500-2000SF SFH in Philadelphia for $1200-$1500. There's no reason they'd want to pay twice that to our property landlords.
2) THEIR CREDIT RATING
College students almost always pay their rent. At least the ones that I rent to. Out of all the students we've had, only had four (4) did not pay their lease in full since we began managing student housing. Over 4 million dollars of student housing leases and only ~$3500 was not paid. That's over 99.9%. And we do this without parental guarantors.
Related: How Import Are Credit Scores To A Property Management Company?
3) ABILITY TO RAISE RENTS
Raising the rent $100/month on a family is a big deal. Raising it a $100/month on a duplex that 4 students are sharing is only $25/person. The fact that they split the rent up makes it much, much easier to raise rents on student housing tenants versus non-students.
4) CONSISTENCY OF THE TENANT BASE
Barring a catastrophic occurrence, Philadelphia Universities will be there for a long time. Every single year thousand upon thousands of new students will come in needing student housing. I know when they need to move in and when they need to move out. Companies and even military bases can close down and move away, but this is highly unlikely with Any Philadelphia University.
There are roughly 8,754,999,549,142 reasons why you'd NOT want to rent to students but here are my top 4.
1) DEALING WITH PARENTS
This is usually surprising to a lot of other investors. My least favorite thing about student housing rentals are not the students. It's their parents. They're usually well meaning, but when they get involved with the leasing process, a repair issue, a neighbor complaint, etc, it always escalates the issue. And it's because they're only getting 20% of the story from their child. Dealing with and communicating with 6 nineteen year old girls living in a property together is hard enough, I can't and won't deal with their 12 parents.
2) DEALING WITH NEIGHBORS
Neighbors in my Philadelphia market don't like student rentals just as they don't everywhere else on planet earth. Their treebox, have loud parties, etc. And they're right. That's what students should do. However, that is not realistic. These same neighbors are living 3-4 blocks from 30,000 students and 25 bars. I've been able to curb a lot of this through large fines in my lease, but even having to pay $1,000 will not always dissuade my tenants from continuing that behavior.
3) IRRESPONSIBILITY OF THE TENANT
If you're renting to students forget about ever getting them to admit to anything. They lie all of the time. "I don't know what happened" or "It was that way when I got home" are the constant excuses I hear regarding damages to the property. I've had over 100 broken windows in the last decade and only had 4 of those admit to breaking it on their own. Full disclosure I was the same way when I was in college. They're not bad kids, but they are kids.
4) CONSTANT TURNOVER
80% of our student rental properties turn over every single year. While a pro that renting to students is that you'll never get a call on Christmas Eve or other holidays because they are usually not there; student rentals does make the summer an incredibly busy time, especially with a lot of these turnovers happening within an 8-10 week span. We tried to expedite these turnovers by using the same wall paint, ceiling paint, trim paint for many of the properties. If you're looking for long term tenants, student rentals are not for you. I've only had one group stay for longer than 2 years and that was only for 3 years.
Hope this insight can help if you're thinking about renting to Philadelphia students. And if you do, Godspeed!
