Student Housing – A Wise Renter Pool?
Few things bring people together like the pride in our children, especially as they go from one life stage to another, such as entering college. On the mainland, it’s not unusual at all for kids to attend university in another state, maybe even on the other side of the country. However, the universities here in Hawaii draw a significantly large local percentage of the student body, almost assuredly due primarily to our island nature. In a nutshell, it’s just too expensive for many families to ship off a kid and luggage to Kentucky or Pennsylvania for a 4-year stint of out-of-state tuition.
And all college students from sea to shining sea require three things to graduate:
- Good grades
- A place to live
- Ramen noodles (I’m only half-joking)
Here in Hawaii, many students live at home with the family while attending school. Obviously this saves a lot of money which is a serious concern for just about everyone these days. But there are still plenty of local students that decide to move out and start the transition of living on their own in addition to all the non-resident students we get from the mainland as well as other countries. Believe me when I say that these can be some of the best tenants you’ve ever had!
Enter Student Housing. If you’re one of the many Hawaii real estate investors whose primary investment strategy is based on Cash Flow, then one day you’ll undoubtedly take a look at offering student housing if you haven’t already. While some landlords might cringe at the knee-jerk image of toga parties and underage drinkers ruining their recently remodeled single family house, there are things you can do to ensure a smooth tenancy. But before we get into that, there’s something you, as a landlord offering student housing, must remember:
The Kids Are Alright
Most college students are good people. “Animal House“, while a GREAT movie (yes, it is), was made a long time ago. If you ignore student housing from your renter pool because you’ll have nightmares of your just-renovated house being torn down and trashed, then it’s time to shake that image because you’re ignoring a category of some of the best tenants you could ever have. Embrace student tenants as young adults who are trying to better themselves and launch the next phase of their life and career. Remember, these are our next surgeons, attorneys, business leaders, artists and scientists.
I remember when I first moved to Hawaii as a graduate student. I lived in a rental house in Makiki and the two landlady owners would just randomly show up for no real reason whatsoever. We felt like they spent more time at our place than at theirs. I remember one day walking out of the hallway shower in a towel and they’re holding a business meeting in our kitchen. Unacceptable. Needless to say, there was a lot of turnover at that house. DO NOT BE LIKE THEM. If you treat your tenants like adults, they are likely to reciprocate and it will show in the condition of your property and in your cash flow / net operating income.
In Part 2 of this post coming up in the next few days, I’ll give you some critical Do’s and Don’t’s of offering Student Housing for your Hawaii rental properties for great Cash Flow and peace of mind!