Last Updated: January 2024
Student housing is a unique type of rental property that comes with a unique set of both benefits and challenges to manage. Student housing units often bring in premium rental rates (since they are often leased by the room or “bed”) and leases are typically secured by parental cosigners who guarantee financial creditworthiness. However, these premium rates are also associated with frequent turnover, roommate disputes, and the occasional unruly “party tenants”. Below we take a deep dive into everything you need to know about managing student housing properties.
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Student Housing Property Management Defintion
Student housing property management is a specialized type of rental property management that deals with the comprehensive oversight of student housing properties such as off-campus apartments.
On Campus vs Off Campus Housing
On-campus housing offers a captive audience of students, reducing marketing efforts and providing a steady demand, but these properties often require partnership with educational institutions and adherence to specific regulations. Conversely, off-campus properties offer more autonomy and potential for higher returns due to market-rate rents and fewer institutional constraints. However, they may face higher vacancy risks during non-school periods and require more effort in marketing and maintaining a competitive edge in amenities and location.
20 Common Student Housing Property Management Services
Although there are different types of student housing, they all share the same goal of housing students and providing various features and amenities to meet student-specific needs. Maintaining harmony and synchrony in the relationship between the local educational institution and the privatized rental housing provider is vitally important, since both parties depend on each other. Maintaining safety, security, building quality, and disciplinary controls are all key points for student housing stakeholders – Students, their parents, and the surrounding community. Below we take a look at some of the most common student housing property management services:
- Leasing Services: This can include conducting showings, drafting lease agreements, and handling both physical and digital lease signings.
- Rent Collection: The management company ensures timely collection of rent and other payments from tenants.
- Property Maintenance: Regular cleaning, repairs, and maintenance tasks are handled by the management company to keep the property in top shape.
- Emergency Repairs: Handling urgent issues that affect the safety or habitability of the property.
- Tenant Screening: This includes conducting background checks, credit checks, and verifying references for potential tenants.
- Move-In/Move-Out Inspections: These ensure that the property is in good condition at the beginning and end of each lease.
- Property Marketing: Creating and executing strategies to attract potential tenants to the property.
- Rules Enforcement: Ensuring all residents follow the lease terms and property rules.
- Conflict Resolution: Handling any disputes or issues that may arise between tenants.
- Regular Property Inspections: Conducting regular check-ups to ensure the property is being well-maintained by tenants.
- Community Building: Organizing social events or activities to foster a sense of community among tenants.
- Compliance Management: Ensuring the property adheres to local, state, and federal regulations, including those specific to student housing.
- Security Management: Implementing and maintaining security measures to keep tenants safe such as security cameras, video doorbells, or hiring security personnel.
- Financial Reporting: Providing regular property financial reports to stakeholders.
- Vendor Management: Coordinating with vendors for services such as landscaping, pest control, etc.
- Utility Management: Overseeing utilities for the property and ensuring they are functioning properly.
- Internet and Technology Services: Providing and managing technology-related services, such as high-speed internet.
- Furniture Provision and Maintenance: For furnished units, providing and maintaining necessary furniture.
- Parent Communication: When necessary, communicating with parents of student tenants about lease terms, payments, security deposit deductions, and other important issues.
- Academic Year Cycle Management: Managing property tasks that align with the academic year, such as coordinating move-ins and move-outs around the start and end of school terms.
9 Important Student Housing Property Management Ratios and Metrics
Student housing facilities, like other types of rental real estate investments, have several key performance indicators (KPIs) and metrics that are important to track. Below are 9 of the most common key metrics and ratios used in the student housing industry:
This is the percentage of rented units or beds compared to the total available. High occupancy rates indicate strong demand and efficient operations.
Revenue per Available Bed (RevPAB)
Similar to Revenue per Available Room (RevPAR) in hotels, this metric calculates the total potential income per bed, regardless of occupancy.
Revenue per Occupied Bed (RevPOB)
This is similar to RevPAB but only considers income from occupied beds. It can help understand the effectiveness of rent pricing.
Net Operating Income (NOI)
NOI is the total income from the property minus operating expenses (not including financing costs). It’s a key indicator of the property’s profitability.
Student Retention Rate
The percentage of students who continue to live in the housing year over year. High retention rates can reduce marketing and turnover costs.
Tenant Turnover Rate
This is the percentage of total units or beds that see tenant changeover in a given period. Lower turnover rates can lead to lower administrative and maintenance costs.
Maintenance and Repair Costs
These costs can be significant in student housing, so tracking these metrics and managing them effectively is essential.
This is the percentage of tenants who are late on their rent. A high delinquency rate can indicate problems with rent collection processes or financial issues among tenants.
These occur when unpaid rent must be written off as bad debt. Minimizing collection losses is important for maintaining healthy revenue.
What to Look For in a Student Housing Management Company
As either an experienced or prospective investor in student housing properties, you might want to be as hands-off as possible when it comes to your rental property. But, that doesn’t mean you should cut back on your property management efforts. In fact, finding a great student housing property manager is one of the most important steps you can take to ensure your investment is a success. Here are a few things to look for when you’re searching for a student housing property management company:
- Find a manager that understands the local student housing market. The student housing market is unique, and it’s vital to find a property management company that understands the nuances and can offer services that the property needs. For example, they should know how to effectively market to students and their families, as well as how to deal with the challenges of managing a property occupied by students (noise complaints, parties, etc.).
- Work with a company that has a demonstrated track record of success. You don’t want to be a guinea pig when it comes to your investment, so it’s crucial to find a property management company with experience in the student housing market. Ask them about their experience managing student housing properties, and look for a company that has a proven track record of success.
- Locate a management firm that offers a comprehensive suite of services. From marketing and leasing the property to maintenance and repairs, your property management company should be able to handle every aspect of your student housing property. This will not only make your life easier, but it will also help to ensure that your property is well-maintained and operated efficiently.
- Get a student property manager that’s responsive. When you have a question or concern, you should be able to get a quick and helpful response from your property management company. This is especially important when it comes to property maintenance and repair issues, as you don’t want your tenants to be left in the dark (or, worse, living in unsafe conditions).
- Hire a firm that charges a fair fee. You don’t want to overpay for property management, but you also don’t want to cut back on quality. Look for a company that charges a fair fee for their services, and be sure to get a detailed breakdown of what’s included in their fees.
Remember that hiring a property manager is only one option- you can certainly manage the property or properties yourself, assuming you’ve got the time and know how. With that said, if you take the time to find a great student housing property management company, you’ll be well on your way to a successful investment.
Student Housing Property Management Fees
The fee to manage student housing properties usually ranges between 7% and 10% of the gross rental income, in addition to a typical one-time fee (i.e. lease-up) for each new lease signed. Since most student housing properties are leased “per bed” (i.e. per room), there can be substantially more leases written than a regular residential multifamily apartment of similar size. Agreements to manage student housing properties can be based on “fixed fee” where fees are based on a fixed amount regardless of occupancy, or more commonly “cost plus” where the property management company is paid a base fee plus additional incentive fee based on the amount of revenue brought in. Regardless of the management fee structure, it is best to ensure that the management company has adequate experience with student housing properties.
Student Housing Management Software
Student housing management software helps coordinate the many various aspects of managing student housing properties. Common features of student housing management software includes rent payment collection and accounting, maintenance submissions and tracking, and tenants and lease management.
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Student Housing Property Management FAQ
What’s the Best Time of Year to Lease Student Housing Properties?
The best time to lease student housing properties usually aligns with the academic calendar. Leasing typically begins in the spring for the following academic year, with peak leasing activity occurring between May and August.
How do you Calculate the Rent for Student Housing?
Rent for student housing is typically calculated per bed rather than per unit. This allows each student to be individually responsible for their portion of the rent. Rent amounts can be influenced by factors like proximity to campus, amenities, market rates, and unit size.
How Does Student Housing Differ From Traditional Multifamily Housing?
Unlike multifamily rental housing, student housing is uniquely tied to the academic calendar, has a higher turnover rate, and often involves leasing by the bed. Additionally, student housing often requires additional amenities like study rooms, internet connectivity, and communal spaces.
What is a “Parent Guarantee” in Student Housing Leases?
A parent guarantee is when a parent or guardian co-signs the lease, making them legally responsible for paying the rent if the student fails to do so. This provides additional security for property owners and managers.
What are Tenant Retention Strategies for Student Housing Properties?
Strategies for retaining student tenants include providing excellent service, maintaining a safe and clean property, offering desirable amenities, and fostering a sense of community. Many of the largest student housing rental companies also offer renewal incentives or discounts to encourage students to renew their leases.