If you have children about to enter university or are considering a property investment, purchasing a home to rent in a university town can be a lucrative business. But before you hire a realtor, be sure to do some research and understand this new venture’s benefits and potential drawbacks.
Benefits of Renting to Students
Choosing a property close to the school ensures you will always be able to fill the home with student renters who are looking for affordable housing. International students present an opportunity for a steady income stream as most come to Canada alone and must rent accommodation.
Renting to students can seem a bit daunting as these are tenants without a credit history and no source of income, but in most cases their parents are paying their way and will be the ones responsible for the rent. Getting a parent or guardian to sign the rental agreement helps ensure you will be issue-free throughout the year.
As a bonus, if you have a child attending university, you have the peace of mind knowing you’re providing a safe home for them to live in while they attend school.
Drawbacks of Student Rental Properties
The main downside of renting to students is that they are young adults who are not accustomed to looking after a home and may not treat it with the same care and consideration as a mature working adult. Parties run rampant in university settings, which can lead to unruly behaviour and damage to the home. There is also the concern of uncleanliness and improperly stored food, leading to vermin, mould, or insects. Choose your tenants wisely!
Becoming a landlord in another city or town makes it more challenging to maintain the property, like cutting the grass or replacing a broken appliance. If your primary residence is more than an hour away from the rental, it would be wise to find a local plumber or home improvement company in the area to save you a long drive in the evening to unclog a toilet.
What to Consider When Purchasing a Property for Student Tenants
Ultimately, you want the rent to cover the mortgage cost and have some additional money set aside for repairs or emergencies. It makes the most sense to purchase a home with maximum rental space. A 3-bedroom home can become a 4- or 5-bedroom by adding two rooms in the basement, for example.
Today’s student is looking for affordable, yet desirable living accommodations so minor upgrades will go a long way. Choose quality products for installations like toilets and sinks. While it may cost a few extra hundred dollars upfront, they will last longer and cause you less in repairs in the long run. When choosing flooring, use laminate or vinyl-tiled options, which are cost-effective and durable.
Where to Buy
A recent report from Canadian Real Estate Magazine listed the top five cities for making a real estate investment in 2021. Ironically, all five have a large Canadian university. Windsor (University of Windsor and Odette School of Business), Guelph (University of Guelph), Hamilton (McMaster University), Kingston (Queen’s University) and Vancouver (University of British Columbia). With the exception of Vancouver, each of these cities boast an affordable housing market which makes it a win-win situation when combining affordable house prices with a high demand for rentals.
Overall, students can be great tenants, and their short-term leases allow you time for updates, renovations, or the flexibility to sell when the time is right. With the proper planning and foresight, renting to students can be a rewarding and lucrative business.
