Student Rentals Have Great ROE—Here’s Why

One of the many great things about renting to students is that it can have a high “return on effort” (ROE). But before landlords can take advantage of this possibility, they need to understand some of the ways in which student rentals are different from regular rental properties.

Student Rentals

With over three quarters of college students living off campus and rental housing for students being such a competitive market, landlords who own properties near university campuses need to do everything they can to attract a steady stream of student renters. However, some methods are more effective than others—and knowing how to determine which is which may seem counterintuitive.

One of the many great things about renting to students is that it can have a high “return on effort” (ROE). But before landlords can take advantage of this possibility, they need to understand some of the ways in which student rentals are different from regular rental properties. Many landlords operate under the assumption that completing huge, expensive and complicated renovations is the best way to yield a good return, but one of the great things about renting to students is that this level of effort often isn’t necessary.

For example, while converting a larger single-family home into a duplex could theoretically allow you to raise your rent, this type of project is a massive undertaking that’s going to require a lot of money, time and EFFORT to complete. When we talk about ROE, this is what we mean: a duplex conversion just doesn’t have high ROE. Fortunately, there are alternatives that do.

However, before we get started it is important to know that some lenders do not like financing student rentals. So, if student rentals are your preferred investment method, we want to help you find the ideal lender for you. All you need to do to get started is click the link below to book a free strategy call.

It’s All About the Bedrooms…

What’s great about student rentals is that the easiest renovations can often yield the best returns. Think about it this way: since student rentals are typically rented out by the bedroom, what’s the most obvious way to actually increase your rental income? You guessed it: increasing your number of bedrooms.

It’s true that a duplex conversion could increase your number of bedrooms… but it will also require you to double up on the other spaces every home needs (kitchens, bathrooms, etc.), thereby increasing the effort and expense required to complete the renovation. It would be a whole lot easier to find space for additional bedrooms within the existing layout. Here are some options to consider:

Add a wall: Own a house with a huge master bedroom? It may be possible to turn it into two decent-sized bedrooms with the simple addition of a wall. This is probably the easiest way to add a bedroom and increase your rental income.

Convert a formal dining room: While more established renters may prefer to have a formal dining room, this isn’t necessarily a priority for students. This space could pretty easily be converted into a bedroom.

Use the basement: If your finished basement has a high-enough ceiling, you may be able to turn the space (or at least part of it) into a bedroom. Just make sure you have an egress window.

Obviously, your property will need to be able to accommodate the new bedroom in a natural way that doesn’t completely disrupt the flow of the space. But if you can make it work, adding even a single bedroom can pay off big time when you consider you could pull in an extra $700 a month with a minimum of effort.

Discover How To Rent A Property With This Step By Step Guide

But Remember the Bathrooms, Too…

While adding a bedroom or two may be a perfect way to maximize the possibilities of your property’s existing layout, at the same time, you don’t want to get carried away. Going overboard and thinking you can see new bedrooms (and future dollar signs) all over the house can work against you if you forget about bathrooms. Yes, all of your tenants will be delighted to have their own bedroom, but no one wants to find themselves in an ongoing eight-way battle over a single bathroom.

Ideally, you’ll want to have a bathroom for every three bedrooms. In other words, a two-bedroom, one-bathroom home could support the addition of one more bedroom, while you could add up to four bedrooms to a two-bed, two-bath home if the layout allows it. Not having to build a whole new bathroom makes the ROE that much more attractive.

Naturally, there are other relatively low-effort projects that can make your property appeal as student rentals, such as investing in laundry machines, creating a backyard patio or installing a security system, but that’s not the same as actually putting more cash in your pocket month over month. When it comes to the latter, there’s really nothing better—and often nothing easier—than adding a bedroom and gaining an additional tenant in the process. It’s just a matter of recognizing what you have and seeing how you can get more out of it!

For access to a FREE student rental property analyzer and to learn more about the benefits of student rentals click  HERE or email Gillian HERE Alternatively, you can book a free strategy call to discuss financing student rentals and more at the link below.

Investing In Student Rentals, With Scott Dillingham