Please hold the animals: Renting to college students

“Who dropped a whole truckload of fizzies into the varsity swim meet? Who delivered the medical school cadavers to the alumni dinner? Every Halloween, the trees are filled with underwear. Every spring, the toilets explode.”

–Dean Wormer, National Lampoon’s Animal House

Ah, college.  The time in life so bursting with memories that many of us look back on it with a wistful fondness.  And maybe a pinch of horror.  Some of us more horror than others.

If you’re fortunate enough to own property in a college community, you’re either just beginning to weigh the advantages and disadvantages of renting to students, or you’ve already looked at the risks and rewards.  Regardless, college communities are target rich–new prospective tenants roll into town two to three times a year–and there is no question that renting to them can be highly profitable.  From a business perspective, eliminating the student population from your potential tenant pool makes very little sense.

So how to decide if renting to students is right for you?  Contrary to all the horror stories you may have heard, most students do not move in hellbent on hosting five parties a week and destroying everything they can.  In fact, if you look back on your own experience you may even remember some studying and quiet Sunday afternoons.  You can and should expect more damage and a few mistakes, but an inexperienced tenant doesn’t have to be an impossible one.  In fact, some of the extra care required of college landlords may be helpful for all landlords.  When it comes to dealing with new or inexperienced renters, care is the first word.

If you’re thinking of opening your doors to college students, study this.

• Expect higher than average repair costs and damage. Making your property a no party zone is sort of rolling out the welcome mat for mockery and defiance.  Unless you’re lucky enough to rent to the campus exceptions, parties and gatherings will, more than likely, take place at some point.  Prepare to repaint as often as each turnover season, and replace carpet on an accelerated schedule.  Build these additional costs into the monthly rent and charge a security deposit that makes you feel secure (and complies with any of your state’s security deposit limits or maximums).   As always, be clear in your lease language that your tenant is responsible for major damages and losses.
• Every man is *not* for himself. College students tend to live together, and college students tend to be a bit transient.  When it comes to collecting the rent in full, neither of these tendencies is your concern.  When screening and signing leases with multiple parties, each enters the agreement as though he or she has full responsibility for the rent.  If Joe + Mark + Brad becomes just Joe, Joe agrees to pay Mark’s 1/3 and Brad’s 1/3 until the lease ends or you both agree to a sublease.  It’s best to allow no exceptions.
• Use one year leases, charge more for school year leases. For some college students, a “year” in your property is considered August to May, which makes yours a very cold summer.  Because some students will always choose to leave for break, it makes sense to offer a 9-10 month lease at a premium and/or make subleasing options available.  While longer committments are preferable, you may find that shortened leases are helpful when it comes to making repairs, painting, etc. and getting units ready for new fall tenants.  Particularly if you’ve cushioned the financial hit ahead of time.
• For credit and other screening, talk to mom and dad.  Running a credit report on your student tenant may not be particularly helpful.  At this stage of the game, your tenant(s) may have little to no credit history, but it’s a fact that comes in handy.  Involving a student’s parent or guardian in the transaction is a wise move no matter what, not only to insure that your financial interest is backed but to help mitigate party problems.  Of course it’s not true for everyone, but having a parent’s phone number at your disposal when noise or damage gets out of hand can be a quick, effective solution…particularly if mom and dad are footing all or part of the bill.  Parent co-signers should be a rule when a student’s credit history is insufficient, and you may even wish to consider it a rule for all student tenants, even those with a history you’re comfortable with.  While you’re talking, take note of the parent’s interest level, willingness to cooperate with rules, and questions.  Most apples don’t fall far from the tree, and you may be able to learn a lot about your new tenant by watching mom and dad.
• Assume they’re all mama’s boys and pampered princesses–save your appliances! While it’s a scary thought to imagine a 19 year old who hasn’t touched a dishwasher or dryer, they’re rare but out there.  You can’t guarantee that they’ll be read, but you should include a handout of appliance usage instructions in a new tenant packet.  Also helpful are large, easy to read signs in communal laundry areas specifying the do’s and don’ts of washer and dryer use.  Insulting one or two “domestic experts” is worth it if you can save yourself one kitchen flood or prevent an appliance replacement.
• Think extra security during breaks. Nothing is more appealing to would be criminals than apartments containing more electronics than furniture that are  known to be deserted for a month.  If you don’t have onsite management, prepare for semester breaks by adding security to protect against break ins and vandalism.  It can be as simple as extra lighting programmed with timers, as complex as outsourcing a security service.  Anything you choose to do will protect your property and give your tenants extra peace of mind.
• No tolerance: Police visits, rent problems, and unauthorized guests.  Again, most college students are not there to cause trouble, but the ones who are will show themselves pretty readily.  Your lease should include some no tolerance issues and the consequences for violation.  If your property suddenly becomes a known problem house for the police, or you get the sense that it’s filled with squatters, or timely rent payments are becoming a fantasy, it’s best to cut your losses and find a new tenant or tenants.  If there is an upside to taking action in these extreme cases, it’s knowing that most of those kids won’t stick around long enough to bad mouth you to the college set.  If they do, people rarely trust the word of the guy majoring in beer pong anyway.

Filed under: General Information, Links, Property Maintenance, Property Management Topics, Real Estate Investment, Urban Renewal, affordable housing, college housing, customer service, eviction, fair housing, foreclosure, investment, Landabout, Landlord, Property Management, real estate management, reduced vacancy, rental, security deposit, tenant pet policies, tenant turnover, wealth creation

Good reads: This week in property management

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New Hampshire officially makes cable a privilege, not a right.

Interesting tax question for owners of mobile homes offering Section 8.

In the UK, trouble on the rental scene…more tenants late at year’s end.

Floods in Australia, the rent is still due.

Sacramento stays steady.  Good things to come here at home in 2011?

Going to the Big Game?  Check out this sweet manse for rent…your daily tab starts at $15k.  If Hollywood is more your style, you can pick up Orlando Bloom’s bachelor pad for a mere $18K/month.

 

 

Filed under: General Information, Links, Property Maintenance, Property Management Topics, Real Estate Investment, Urban Renewal, affordable housing, customer satisfaction, customer service, fair housing, foreclosure, investment, Landabout, Landlord, section 8, tenant turnover, unified communications, Urban Renewal, wealth creation

Bitten: Property management, bedbug infestations, and who is responsible

If you were ever tucked in as a child with the sweet sing-songy phrase, “Sleep tight, don’t let the bedbugs bite” you may not have the worst opinion of the pest known as the bedbug.  Outside of your grandmother’s nuturing rituals, however, bedbugs are highly frustrating and anything but cute.

Bedbugs are small, parasitic insects from the family Cimicidae.  Although they will feed on any warm blooded animal, they have a particular soft spot for the taste of human blood.  They are flat, reddish-brown in color, wingless, and about the size of an apple seed when mature.  Because of the microscopic hairs on their bodies, they may look as though they have stripes.  They are elusive and generally nocturnal, and because not all humans have a reaction to their bites, infestations can progress and spread to a serious degree before a problem is even detected.

Gross, right?  Wait, there’s more.  Unlike other pests (rats, mice, roaches, ants, etc) bedbugs aren’t at all selective.  They aren’t drawn to filth, and there is very little that can be done to prevent them.  They are extremely adept hitchhikers, and will gladly move in with the rich, the poor, the meticulous, and the messy.  Having a warm blooded animal around would seem to be their only screening criteria, but even that doesn’t pass the test.    Able to live up to 18 months (no, that’s not a typo) without feeding, they are content to wait it out in duct work, walls, carpets, or any number of other hiding places until their next meal moves in.  Bedbugs do have a few natural enemies, but because they tend to be other bugs like roaches, spiders, and biting ants, most people are reluctant to invite those kinds of troops to fight a bedbug war.

Fifteen or twenty years ago, you would have had a much tougher time finding cases of bedbug infestation.  Chances are, if you were a property manager back then, it wasn’t even on your radar.  This is because bedbugs were all but eliminated from the US by the 1960s.  A variety of factors, including a sharp spike in international travel, the banning and regulation of certain pesticides like DDT, and even an increase in the sale and exchange of second hand furnishings have given the bedbug new power.  Cases have steadily been on the rise since the mid 1990′s, and by some accounts the number of  infestations nationwide has increased up to 500% in that time period.  In NYC alone, complaints jumped from 1,839 in 2005 to 8, 830 in 2008. 

Overwhelmingly in property management, the biggest question after “How do I get rid of them?” is “Who has to pay for it?”  It’s question that is not at all black and white.  Treatment is often a long term process with multiple visits from a service provider and can be expensive (a few hundred dollars if detected early, thousands in other cases). Some non profit organizations will help with the cost for low income victims, but all cases will require a great deal of landlord/tenant cooperation.  No one could or should put cost aside, but bedbugs are unique in their obstinance and neither party can get them out on his or her own.  Laws vary by state, and the expense is often considered to be the tenant’s.  However, the rise in cases has more states adopting tenant protections when it comes to bedbugs, and more courts are finding against property management companies in these matters.

Unlike most damage to your property, the origination of a bedbug infestion is often impossible to pinpoint.  Culpability is not only difficult, it becomes extremely tricky when you consider a tenant plagued by bedbugs may have picked them up on a movie theatre seat, or by brushing up next to the wrong person on the train.  Yet placing extermination costs solely with a property owner is arguably unfair as well, particularly if a tenant fails to report the problem early or doesn’t cooperate with treatment preparations and follow up.  That said, when it comes to disputes, a court may fall back to the unique nature of this problem.  In 2004,  Judge Cyril Bedford sided with a tenant in Ludlow Properties, LLC v. Young.  The tenant refused to pay rent for six months because of a persistent bed bug problem, and Judge Bedford wrote, “Although bed bugs are classified as vermin, they are unlike … mice and roaches, which, although offensive, do not have the effect on one’s life as bed bugs do, feeding upon one’s blood in hoards nightly turning what is supposed to be bed rest or sleep into a hellish experience.”

By now, you’re already reviewing your lease to check on your pest control treatment language.  Nearly as important as the guidelines you establish for financial responsibility are your requirements for treatment preparation, temporary displacement, and any necessary moving or discarding of personal property that goes along with it.  First and foremost, when you learn about a bedbug problem, don’t lose months in a back and forth debate over who will pay.  One female bedbug can lay 500 eggs over a year, and they are mature and ready to feed every three to five days in as little as 5 weeks.  To say time is of the essence is a horrible understatement, since a bedbug family can turn into a booming metropolis, infecting not just one but all of your units, in the blink of an eye.

When it comes to deciding just how much responsibility you will take (should your state’s laws leave it up to you), there are a few important things to consider.  As mentioned before, a bedbug issue should be approached differently than any other pest or damage concern, and the importance of working with your tenant(s) to solve the problem can’t be overemphasized.  For this reason, fully absorbing or sharing the cost of elimination may be in your best interest. 

Taking on or sharing responsibility allows you one important liberty that can have an impact on a successful result: control over the pest management provider.  Having a say in the extermination process means being able to work with someone who has direct experience with multi-family dwellings, which is extremely important since bedbugs are crafty travelers.  Having a tenant in a multi-family property hire his or her own exterminator to treat a single space may simply send them running into another unit.  In fact, when an infestation begins, you can generally count on the fact that it won’t be or stay confined to a single living space.  Now a problem that began in one unit becomes the problem of two or more units, and the question of who pays to fix it gets even fuzzier.

Unfortunately, basic fairness can’t really be a tool in the handling of bedbugs in a rental property, as nothing is fair in bedbugs.  No human behavior or habit invites them, and they are exceptionally difficult to remove.  Yet, the job is impossible without making it a group effort.  Though it’s an expense that no one wants to take on, agreeing to do so in full or in part may be the best solution to a problem that really bites.

Filed under: General Information, Property Maintenance, Property Management Topics, Real Estate Investment, affordable housing, bedbugs, customer service, investment, Landabout, Landlord, lease, lease law, multi-family, multi-family safety, pest control, Property Management, real estate management, reduced vacancy, rent, rental, security deposit, tenant pet policies, tenant relationships, tenant turnover, unified communications