Managing student rentals requires a bit of a different mindset. Plan, plan, plan. Our cycle for student rentals starts around Thanksgiving to set ourselves up for success when we have upcoming vacant properties. We’ve built a very tight system with staggered move out dates and minimized lost rental days.
Background and Power of Buy & Hold with Students:
2:20: Bill stumbled into student rentals at the age of 35 and came across a house across the street from the University of Oregon where he could turn a 3-bedroom house into a 5-bedroom house.
5:30: That first house Bill bought was $80,000 and over 30 years has put $175,000 into it and it’s now worth $950,000, cash flowing $6000-$7000 a month. That’s the power of real estate investing.
8:39: Student rentals require a different mindset than traditional market stuff. There’s way more turnover in a shortened period of time.
Managing Student Rentals:
10:20: By January, we’re asking students to sign a new lease and make sure they know they’re moving out. We then hit the ground running in February getting those houses rented for the following school year.
13:40: The bedrooms are usually kept nice, but the common areas are destroyed.
15:30: We rent the entire property, not rent by the room but like to set up a “house manager” in our houses to be our go to point of contact.
17:20: We start our rehabs and turns the moment school is out, but over the last 10 years have staggered the move out dates. We know cleaning, painting, carpet, etc. all have to be prescheduled.
Strategizing Student Rentals:
19:20: Hone your efficiency in general. Every single day lost is the day of a rent lost.
21:30: We’re always upgrading a little bit so we can keep up with the changing market.
24:40: You don’t have to be across the street to start investing in student rentals. There’s different circles around the campus that still make it accessible by walking, biking and driving.
27:16: You can do student rentals in different markets, but we think it’s geared more for a college town.
Follow the Path of Progress:
30:11: Subscribe to your local business journal to keep a pulse on the early conversations or commercial investments in areas that could gentrify.
How To Succeed With Student Rentals:
31:50: Be careful if your only option is renting to students. You need multiple exit strategies.
33:17: One of the most important things with buying student rentals, you need to be sure the timeline lines up to where you can rent it out for the upcoming school year.
35:01: Make sure you’re marketing to students. Dorm mailers, Facebook ads, ads in the student news paper, using an online program endorsed by a university, etc.
35:00: Bottom line, if you want to treat this as a business, you have to have access to where all of the business has done.
Connect with the Good Stewards:
Bill: (00:00) Over the course of many, many years, we've hardly lost any money in damages in student rental property. So, I would not turn away from the thought of thinking about getting into this and that you market yourself. Another thing that you might want to be aware of. Yes, some of the larger universities are harder to get into in terms of just starting this, but you don't have to be across the street from campus to make this happen.
INTRO: (00:26) Welcome to The Good Stewards podcast, the only podcast dedicated to seasoned real estate investors who want to maximize the cashflow potential in their business. We are “buy and hold” investors with a thousand plus properties and markets across the U.S. who bring an insider's view into the nitty gritty details of real estate investing. If you're looking to develop the mindset teams and systems that can dramatically build your real estate business and network, you're in the right place.
Ryan: (00:59) Welcome to this episode of The Good Stewards podcast. I'm Ryan Dossey.
Amanda: (01:03) I’m Amanda Perkins.
Bill: (01:04) I'm Bill Syrios.
Andrew: (01:06) And I'm Andrew Syrios.
Amanda: (01:07) Hello, Good Stewards. There are a handful of different strategies for owning and managing rentals near universities and more expensive markets. We've got a large student rental portfolio here in Oregon, and they're at a different life stage than say the tenants of a corporate rental or maybe a house hack approach. We've developed a very tight, yearly systemized process around our student rental portfolio. That said there's a lot of variables different than the way you would manage a typical single family. We're going to dive in deep today and kind of go over how Stewardship handles this and how we've kind of made it our business.
(01:42) Before we dive in, we want to connect with you. Please visit us at thegoodstewards.com to subscribe to the podcast and get your free copy of our eBook. I'm kind of going to turn it over to Bill right from the start because this student housing portfolio that we have in mostly Eugene, Oregon, but in a couple other places is really his baby and something that he started back in August of 1989.
Bill: (02:14) Saying started as a little bit like I had a strategy, which is a real misnomer because I tripped over myself and fell into this market by accident almost. I was a campus pastor actually. And so, I liked students. I hung around students. I was comfortable with students and I basically transitioned into being a real estate investor because I saw at one point, I was 35 at the time that, I wasn't going to do student ministry for the rest of my life. So, what was I going to do? And real estate at the moment seemed like a good option. My story has been told in other places, but what I found as I tripped into it was that I bought a property that had the potential of adding bedrooms to it. It had a really nice basement, but the basement was totally unutilized.
(03:07) And so, my thought was, “Gosh, if I could add a couple of bedrooms down here and redo the bathroom, which was kind of a mess, I could probably increase the rental value from a three bedroom house into a five bedroom house”. It was just a block away from campus. A family had owned it for 50 years and it was just a family home. But using those extra two bedrooms increase the rental value tremendously. And so, I kind of thought after I did it, “Yeah, I could do that again” because increasing the rental value increased the value of the house in general, which allowed me to refinance it and use the BRRRR method to pull my money out and to do it again. After I did it again, I could realize I could do it again.
(03:52) As a matter of fact, in the process, it wasn't long until I thought about buying my own house. I was renting at the time. And my wife Theresa was shall we say, encouraging me to do that and having a place of our own. But my criteria was that I could find a place that had a rental in it, or I could make it into a rental. And this was kind of a bit of a house hacking thing. I've found a property that we were able to kind of turn around and make part of it into an apartment. And to this day for the last 20 some years, 25 years, it's been a two-bedroom student rental that is in our house. It's fortunately on the side of our house in a way that we have a separate entrance and all that. So, again, it's just about adding rental value. And I bet…
Ryan: (04:41) I want to highlight that real quick. Because I know some people that are like, “Oh, house hacking is beneath me”. Right? Bill. I've actually stayed with Bill and to his credit, he's absolutely correct. If you're in the house, you cannot tell that there are tenants there at all. Separate parking, separate entrances. Very, very cool. I think, it's fortunate that Theresa was on board. I know some spouses may not be but…
Bill: (05:15) We're going from a rental to actually owning your own place. She was on board with that. So, we kind of split…
Ryan: (05:20) There's a little bit of compromise.
Bill: (05:21) There was a compromise there. Yeah.
Amanda: (05:24) I just want to throw one little tidbit out before we move on. Because I think this is very interesting. That first house Bill that you bought in 1989, I believe you paid right around $80,000 for it. And it had a garage in it or a detached garage that you reformed into this three-bedroom, three-bathroom house. That is a wonder. It's really interesting
Bill: (05:54) It’s a wonder because it's a 20 by 20, two stories. So, it's 800 square foot, three-bedroom, three bath property. It is probably if I have anything to have pride over, this is the one thing because it lacks what you don't want to put in houses, it lacks hallways. Every piece of square footage possible, other than a stairway going up the second floor is utilized. So, it is a fine property.
Ryan: (06:19) I think Bill tested the human limits of how many sardines you can fit in a can.
Andrew: (06:24) You certainly found some interesting, comfortable sized clauses to turn into bedrooms over here.
Bill: (06:32) Well, they did call me at one point Bedroom Bill, which was kind of a moniker I picked up because I could see a bedroom where no one else could.
Ryan: (06:42) That could mean way worse things though. So at least it’s real estate related.
Amanda: (06:47) Some of those bedrooms are closets let's be honest. But what I wanted to finish. So, I believe you paid about $80,000. And I think all said and done, you've put up roughly $175,000 into things. And obviously over 30 years there's been capital improvements and remodels. And at that property gross rents a month, depending on the year, usually between $6,000 and $7,000 a month between the front house that has seven bedrooms and the three-bedroom, three-bath, whatever. We call it a quad. It's just a little joke in our office. But the last appraisal of five years ago, it was appraised at $950,000. So that was able to be pulled out obviously over 30 years and reallocated in different markets for us to do that. And it cash flows with the dead on it as it is.
Ryan: (07:44) Don't you wish you would have taken an assignment fee for like $5,000 instead?
Bill: (07:47) Yeah, that's kind of the point where Ryan is saying, you want to try to hold on to as many properties as you can. So, you want to use the BRRRR method, which is Buy, Rehab, Rent, Refinance and Repeat. So, you obviously want to do that on as many properties as you can hold onto, but the question is how in the world can you hold on to some of these properties and get your money out when you get around to refinancing? And that kind of brings us back to the beginning here and that's increasing rental value is the key. Any way, shape or form you can, including in house hacking, creating an apartment in your own place, a group home, we can talk a little bit more of that student rentals. Anything you can do to increase rental value allows you to hold onto properties over time. And that is the key.
Amanda: (08:39) So that first house turned into many. And over the last 30 years in Eugene specifically, you've acquired quite an assortment of campus houses, campus apartments, and we really fine-tuned our property management to run that campus rental market as efficiently as possible. It's a different mindset to manage, the campus stuff than it is to manage the market stuff. It's very cyclical. There's a huge amount of turnover. So, you have to build all of that in and it's a process that you're basically working on for the whole year. So, we do one-year leases with our student rentals. We normally sign a joint and several lease for everyone. We don't often rent by the room unless it comes down to the very end and it would be beneficial for us to break out rooms and rent them individually.
(09:41) For the most part, when we are signing our leases for houses apartments, with more than one resident, they're signing on the dotted line together. They're all responsible together. They're moving in as a group together, they're moving out as a group together. So, we start our process right after Thanksgiving. So right between Thanksgiving and winter break, we send out our lease renewal letters for our residents to make a decision about if they're going to be moving out the following summer or fall, or if they're going to be renewing. Because we have to give them time to think about it. We give them over winter break, maybe to talk to their housemates, talk to their parents who are oftentimes their co-signers. Very important part of the whole process are their co-signers. And give them time to decide what they're going to do. And by the end of January, we're asking them to either sign a new lease or make sure that we know they're moving out. And our timeline is usually right around the first week of February, we hit the ground running with renting up our houses for the following school year.
Bill: (10:55) And we've seen some, I would say amateur student rental landlords who wait. And in our market as many markets that is very competitive because developers have come in and just build a ton of units. So, there's lots of competition now in the student rental marketplace. That doesn't mean, and we can talk a little bit more about this, that you can't find a way to niche into this market. But some of the folks who are kind of have one or two rentals, they might wait until the fall, students are coming back and then they'll put their properties on the market. I see a couple of “For rent” signs still from last fall that have not have gone on unrented because of that lack of strategy and anticipating that rent up period.
Amanda: (11:43) And that can oftentimes work for the ones and twoseas for the one bedroom or the two bedroom apartments. But what we are seeing is to be honest, starting in October the year, like right after students who moved in, there's certain houses. And at one point we had three of five in the top five party houses for the University of Oregon campus, which actually…. Which is a bitty thing to brag about because that comes with its own set of problems. But they were coming in, in October asking to rent houses that they'd been in parties at. And we'll go through and see where our leads came from. And it's like, “Well, I was at a party” or “I was here”. And for better or worse…
Andrew: (12:29) Moral of the story, make party houses. It's free advertising.
Ryan: (12:31) So does the weed… Is the weed supplied as part of the lease? Or is that…
Bill: (12:36) And by the way, that is our niche market is actually sophomores and juniors. And if we can hang onto them, seniors, is our niche-niche market because students are living in the dorm as freshmen because they have to now at the University of Oregon. And I'm not sure about Oregon State where we also have a couple of rentals. But, Andrew, you actually did that. You were a dorm student way back when, in the late 2000s. Right?
Amanda: (13:01) The early odds.
Bill: (13:03) Yeah. You moved into a campus rental property, which, I don't know. How was that transition for you?
Andrew: (13:11) From dorm to…? Well, it was nice to have more than 12 square feet of living space. But I mean, I went from dorm to apartment into a large house. I preferred the apartments actually. The large house was just too many people stuff together. It was like a miniature frat. But I mean, that is kind of I think I'm a little bit, not the normal, I mean, there's all sorts of people for college. So, it's like a lot of people want to live in these big, big houses. And honestly to keep the parties down just the less… And you've seen this a lot with your big houses, the bedrooms are kept nice. The common areas are destroyed. They're just like their nukes from orbit or from college students.
Bill: (14:00) Well, we're not necessarily expecting that, but that does lead to one thing. And that is to try to cut down on the living space.
Andrew: (14:07) Yes. So, think of them like barracks, just like you just throw them in there and stuff them in their little, in their corner without been able to socialize.
Bill: (14:20) One thing I got to tell you is any formal dining rooms you can grab as bedrooms do so because that's not only another bedroom to rent, it cuts down on the living space and the party space.
Amanda: (14:30) Plus these students are not hosting Thanksgiving at their house. Their families are...
Ryan: (14:36) So you guys had mentioned that a group basically decides we're going to rent together and they approach you guys at one of the properties, which is news for me. I was under the impression you actually did by the bedroom. So, on the leases, how does that work? Is it the group as a whole is responsible for paying $4,000?
Amanda: (14:57) 100%
Ryan: (14:58) Or is it four people that are each responsible for paying it $1,000?
Amanda: (15:00) Nope. They're all responsible. And oftentimes they'll make agreements. Sometimes there's a master bedroom and somebody's paying more. And when somebody has the kid room that fits a twin bed, but those are all agreements they work out.
Bill: (15:15) The ex-closet room.
Amanda: (15:16) Those are agreements they work out between themselves. We do not get involved with that. And if somebody moves out, that's not our responsibility to figure out how they're going to pay their rent. If they want to move somebody in, we have to be notified, but we aren't calling individual students’ residents and saying, “Well, you forgot to pay your rent”. It's their whole house is responsible. And we're not tracking down them individually.
Ryan: (15:45) Do you guys typically have like a house mom or a house dad? Like a main point of contact or is that just kind of something they figured out on their own.
Amanda: (15:51) We asked somebody to take the role of house manager so that that person is responsible for reporting maintenance if there's issues with payments, if we have to do showings. Because that basically leads us into our next thing, we get to February 1st, we roll out our next availability list and we have to start renting. And what that also means is we have to start showing occupied properties. And hopefully we only have to show them a couple of times, but by June, if we've had somebody’s house on the market, since February, we're trying our best to only maybe bug them once a week and try to groups because they get tired of it. And honestly, one of the things that we have them do with, we have them sign an addendum. That's part of their lease that indicates when they move in that there will be this showing process that happens so that they're aware of it.
(16:41) And 99% of them, they don't even care. They don't clean up. They don't do their dishes. They don't put their bongs away. They don't do anything. And we have a representative from our company that is always accompanying a group. And we've had very little issue dealing with that. They're fine with it. They kind of understand the process, they know what needs to happen. And so then, we spend that time renting up. So then by the time we get to June, I would say right after mid-June, when school's out, we kind of start our turnover. We've tried to stagger them. When I first came into the company 10 years ago, most of them were actually either a June 15th move out or an August 31st move out. And that was really, really difficult.
(17:31) What that meant was most of the houses were all being moved out on the same day and we only had a limited amount of resources to turn… In some years, if nobody renews, 40 houses. And 40 campus houses are a lot different than 43 bedrooms one bath houses that a couple lived in. These are well lived in. So, over the last 10 years, we've staggered the move outs so that our turnover runs from mid-June through right before school starts in September. And so, we have where our project managers going in identifying big projects that need to happen, we're scheduling all of that. We're oftentimes scheduling cleaning, painting, carpet, cleaning, all the things that we know are for sure going to have to happen. We're getting those all lined out before anyone ever moves out. We're getting that work assigned out because it's a big process.
Bill: (18:26) Well, and what that helped our company just in general with our other just normal campus are extremely normal rental properties for families. We become very efficient because we've had to being forced with the campus schedule and students in and out. So, for going in ahead of time and looking at walls that need to be painted and doors that need to be replaced and so forth. And we're having all that figured out before they even move out and then we're on it the day they move out kind of thing. Boy, it's really helped us not lose rental days. And every single day, one of these $4,000 to $6,000 houses is unrented is a huge amount of loss for us, but it's also a huge amount of loss for you as well if you have a rental property that's sitting there during turnover unrented.
(19:20) So, just trying to hone your efficiency in general. This has really helped us. Think totally efficiently. Every single day lost is the day of a rent lost. So, what can we do to squeeze that amount of time that we're doing and turnover to the minimum?
Amanda: (19:37) We basically allow…
Ryan: (19:37) I've got a question.
Amanda: (19:38) Go ahead.
Ryan: (19:40) So, in Indy, we've worked on trying to make our properties a little bit more resilient. By that we're typically like not doing ceiling fans anymore, we're going more like can lighting, granite, vinyl plank flooring. One of the things you mentioned is these aren't exactly gently used properties. So is there anything you guys are doing that makes these a little bit more robust than say a typical property that goes to a family that may be helpful for our listeners?
Amanda: (20:16) We would bulletproof them if we could, to be honest, but yes.
Ryan: (20:19) A concrete floor?
Amanda: (20:20) No, we don't. But we do a lot of hardwoods. We basically try to do no carpet in main areas including stairs because basically it gets replaced every single year. Carpet is like a rug apparently and too many spills, too many everything. And so as little carpet as we can do, we only mostly do carpet in bedrooms. As we've needs with students and what they want, some of them are… I mean, I don't want to be disparaging, a little bit spoiled and they're accustomed to what they had at home. So, they're wanting that in their rental. So, we've had to up our game with that, updating kitchens, bathrooms, all that sort of thing, putting in the nicer flooring, the nicer countertops surfaces, stainless steel appliances, more bathrooms. And we have to preplan those upgrades because on a normal turnover, we give ourselves 7 to 10 days to get in and out.
(21:25) So if we want to do a kitchen, we give ourselves two weeks and that's it. And so, we have to have that contractor lined out, ready to go. The floor plan mapped out. We're always constantly upgrading a little bit. We have our projects that we're identifying so that we can keep with the changing market. We've built some new stuff recently on some lots that Bill owned in a really prime location. And with those houses, we put ensuite in every single bedroom. So, every bedroom has a bathroom and the bedrooms are really nice and large and have decks and all kinds of stuff. And they're really sought after. It's really easy to keep them rented because they're just really amazing rentals. But a lot of that is just the needs of the students have changed, the way that students look for things. It's just things have changed over the years and we have to adapt.
Andrew: (22:22) A lot of the new construction too that's around the University of Oregon is like three bed, four bed, one bath apartments. And so that's just very…
Bill: (22:31) Well, there might be two bath or so but…
Andrew: (22:35) Maybe get a second one. But yeah, very, very simple drab construction. And so, yeah, I mean, when you're targeting you need to have some sort of competitive advantage.
Amanda: (22:45) One thing in Eugene specifically, and we noticed this during the last recession, there wasn't a lot of new construction happening. But a lot of people were flocking back to school. And what that meant is there were no real housing needs outside of the campus area, but developers came in and discovered, “Oh gosh, there's a ton to be built in right around the University of Oregon”. And they were tearing down houses and doing anything they could to put up big structures. And we're fine with that obviously, but it's not necessarily our model. But what that's done is made a lot of our houses more valuable because a lot of older houses that were prime campus houses got torn down to put bigger stuff up. And so, we've just tried to make our houses nicer and more upgraded as needed to kind of attract that, whoever’s looking for that.
Ryan: (23:42) You guys have a slogan for that, don't you? Isn't it like…?
Amanda: (23:46) Live in a home.
Bill: (23:47) Living at home. Yeah. I would say a couple of things. One is that we don't really disparage student residents at all because albeit this is a more immature time of life for all of us, many of them do treat our properties well. Now the nice thing about owning student rentals is that the ones that don't, also have their parents as co-signers like everybody else. So not only is five students severally and jointly liable for the property and its condition, the same is true of five different groups of parents. So, over the course of many, many years, we've hardly lost any money in damages and student rental property. So I would not turn away from the thought of thinking about getting into this niche market yourself. Another thing that you might want to be aware of. Yes. Some of the larger universities are harder to get into in terms of just starting this, but you don't have to be across the street from campus to make this happen.
(24:49) So you can be, I call that the A circle. Then there's the B circle that's maybe within walking distance. And there are C circle when in biking distance, then the D circle maybe is in driving distance. But there's still concentric circles around a campus. And you could go farther out, get a better deal on the property. Maybe even buy it from a family as a family home that you turn into a campus rental. And that for many, many times has been our niche within the niche that we're buying a little farther away from campus, because the stuff that you can see campus from is exorbitantly expensive, but you can do the same thing in terms of adding rental value to the stuff that's a little farther away. Maybe you drop the price slightly to do so, but you still have that campus connection that allows you for the rent value increase over time. And by the way, many of these Midwestern small campus, private campus markets, I think are being overlooked by people. I don't know Amanda, if you'd want to talk a little bit about one of our markets that we're in.
Amanda: (25:54) It's very close to home. Bill would call it the Harvard of the Midwest, his Alma mater. Emporia State University in Emporia, Kansas.
Bill: (26:06) Yeah, my wife and I met and went there, graduated with honors I think it was, or with something. At least with a degree. So, a big plug for Emporia State.
Amanda: (26:18) We have a “buy and hold” business there, and we're not focusing on campus there, but we are definitely buying stuff and trying to target a student rental market there because there's a lot of houses close in to the campus that have been previously maybe rented by families or singles and they are good places for us to house students. And if we target that student market, it's maybe not as competitive as say our Eugene market or our Corvallis, Oregon markets, but we still can see a couple hundred dollars flux up in cashflow a month if we target a student audience. So, you might, you could ask yourself like, how could I take this kind of a model maybe to make it work for myself? We're in a couple of different places and there's Universities nearly everywhere.
(27:16) And for us, the campus market, we feel like is kind of geared more to like a smaller college town. But that doesn't mean that you couldn't do it in other markets. But if we say we go to… We're in Kansas City and there's some universities more in the downtown area, it's hard to distinguish between what would be campus housing in the downtown and what would be just downtown living. So, it hasn't really translated exactly the same. But there's a lot of markets around the country that would work really well for a campus type of a strategy if that's what you were wanting to do with your business.
Andrew: (27:58) I mean, our intention wasn't to get into student housing in Kansas City, but we have play by… We found it generally, most of the universities in Kansas City itself are smaller or commuter schools or trade schools. Like community colleges or trade schools are almost always commuter schools. People don't necessarily live close to them. They're not going to pay a premium for them. So, there's not… It's not really student housing. University of Missouri, Kansas City does have some students housing, but has already discovered, it is already expensive. We played around with some parts kind of near Rockers University, a small college, but it was sort of on the wrong side of the University. And that's another big thing. I mean, we looked at an apartment complex in Lawrence, Kansas, where the University of Kansas is, and there was an apartment complex that was sort of low-income housing and we thought it was like, maybe we can change it to student rentals.
(28:47) But like when you look at the demographics of the area, those students all lived in the East, West, or North of campus, not to the South. And so, you need to look at where the students are and whether it's the type of school that students actually live near. And they don't generally live near, or they don't pay a premium to live near a community college, many small colleges, trade schools. And also, regardless of whether it is a community, even if it is a campus where students are very close to it, they don't always live. They don't live in a circle around it. They often live just in certain parts.
Amanda: (29:18) One thing though when you say they don't necessarily live in a circle around it, but it would be very hard to predict. But I will say with the University of Oregon specifically, the East side of campus did not use to be the side of campus that people lived on. But then the house that Nike built came in and they built this beautiful, amazing basketball arena, Matt Knight arena. Then all of the sudden it was the arena district and it had a name and they've been building big housing complexes on the East side and pulling that more in. Now that is a more desired location to live, and there are restaurants there and they're bringing more things in, but that's sort of as the school grew. And also, a lot of money got dumped right at the East end of campus. So that kind of worked out.
Ryan: (30:11) I think that's one good reason to subscribe to like your local business journal. If you're a real estate investor in Indiana we have the Indy Business Journal and it’s kind of lets you know about those kinds of things when they're in the early phases of this is being talked about, this is starting to grow. You can kind of keep a pulse on things. Bill and I own a decent chunk of stuff in a kind of small satellite town off Indianapolis. And one of the reasons we chose to buy so much there is there was a lot of inklings of tax credits and then they got a grant to redo their downtown. And it's not something that you would have seen on like your local news when you're watching, it's something you've got to be subscribed to like a local business journal to kind of get those insights for.
Bill: (30:56) It's the path of progress is what you're looking for. So you put that phrase in your mind, whether it's a student rental, kind of path of the progress, or in general, the value-add, where you see a lot of remodeling going on, where you see people starting to tear down properties and rebuild, oh, they know something that's going on there. They're not just sticking their money out the door for no reason. They've figured it out. So, look for the path of progress. One thing I would be careful about, there are some private universities that are going out of business. And the reason is, is because the demographics are not real favorable right now to increasing student populations. There's one in Concordia University in Portland just went out of business, and it had 5,000 students or so. So, you got to kind of have your hand on the pulse of the situation and be careful that that's not your only option in renting this property if you're around a campus that might be vulnerable to that kind of situation.
Ryan: (32:00) We ran into that in Anderson, Indiana. The school called us, I think, a year ago and wanted to sell like 140 units plus one of their dorms. And it was like, there's nothing else in this town, but you guys. So, if you guys are selling, I don't want anything here.
Amanda: (32:17) Right. I mean, that's a topic for another discussion, but it really… People are not wanting to… Especially with the private universities, they're not wanting to graduate with a four-year degree and $200,000 of student loan debt. So, times are changing, but the public university systems are usually a pretty safe bet because they tend to be fordable and something you can come out…you can come out with a degree and not six figures of debt if you do it right. So, that’s what has worked well for us. And I mean, Bill would probably say again, he stumbled into it. But…
Ryan: (32:53) I think my favorite thing with this strategy is the parent co-signers. You have the ability to literally like throw them under the bus, to the group of their parents. When I was in Eugene, one time I was watching one of your guys, his property managers work, and there was a building that hadn't paid yet. And she just CC'd all the parents along with the kids and said, “Hey, your rent still hasn't come in yet” and it was like paid immediately. Because one of the parents is like, “This is not going on my credit”.
Amanda: (33:25) Say you've acquired something that you wanted to target for, kind of take it out of your residential family dwelling and sort of target it towards a campus. The first thing you're wanting to do is make sure that it's going to be coming available in line with when the school year is. You're not going to be able to end the family's lease in March and expect to get it rented in April to a student group. So, you need to be mindful of that. Fine tune your lease. Our lease has so many things in it and extra addendums, much to Bill's chagrin, but you really need… A lot of these students come into a place and maybe they haven't plunged a toilet or changed a light bulb or changed a battery in a smoke detector…
Ryan: (34:14) Or been on their own.
Amanda: (34:17) Or know to turn the fan on in the bathroom so that there's some air flow. We spell out the details in the leases so that they can know what they're expecting. And we sit down and basically, their lease signing is a bit of a counseling of here's how you pay your rent. This is what we expect from you. These are all the things that you need to do. This is when you call us, this is when you don't. Ever in doubt, call us, let us deal with it. Because they don't know, they're adults, but they're kids. They've come from their parents' house. And some parents don't ask their kids to do very much. So, maybe they don't know how to take care of a house and this is a big responsibility. So, we really spell it out. Make sure you're marketing yourself to students.
(35:01) Make sure you're marketing yourself to students. We used to sometimes do dorm mailers or Facebook ads targeting students and advertising in the student newspaper. There are online programs that are endorsed by the University that we're a part of. You just want to try to, if this is what you're going to do, you want the students to know you as a property management company that has student rental so that they're coming to you more than just the advertising. Then of we do all of the online advertising and the Craigslist ads. Every single place that we can be, we're doing that and we're advertising well in advance. And they know that this is a campus property. We're really spelling that out so that we're trying to make it easy for them to find us and find our rentals.
Ryan: (35:57) I would also say, just as somebody whose wife's in college still, there's typically Facebook groups for universities with their students. So being able to find one of them and get them to share it in that group, because they're typically closed communities. But I know every school my wife was at, she was in a private Facebook group with everybody else in her year that I think you can almost kind of like trojan horse your way into. Craigslist ad, “Hey student, you want to make a hundred bucks?” It could be not such a bad idea to even just “Hey, has anybody looked at this?” Or kind of doing in a way, that's not like, “Oh, you should check out this rental.” But that would be a really good way to get in front of your target market for very little money.
Bill: (36:43) Yeah. And as you're starting now, you're maybe just going to have one property that you're transitioning to a student rental or one that you find that would work well, over time, you wanna try to get to the economy of scale. So if you start down this road, I would suggest that you do try to get a group, a portfolio of student rental properties because that will help you to get into the ethos of the student mindset because you're doing everything for this particular demographic and like lawn care. We do our own lawn care. So, we're not expecting a student to haul down a lawnmower mowing machine with them as they come to campus.
Amanda: (37:25) Or pick weeds because they are not absolutely going to.
Bill: (37:32) As Amanda talked about the student's schedule, you got to be very on top of that. In Emporia we completed a property that we actually had to wait a few months but it was such a great transition from a family home to a student rental. It was worth us to lose a few months of rent to get into the student's schedule situation. It just was because we could increase the rent that much more. And again, if you're targeting this specific niche market think, think like a student. Even go on campus, talk to students – “What do you like? What do you want?” And I think overall, you'll be glad that you did if you can get a portfolio of these properties together.
Amanda: (38:11) We are going to wrap up for today. You can tell we're fairly passionate about this as it's served us well and our business well. Thank you so much for tuning into this episode. If you liked what you heard, remember to subscribe and share the podcast and get your free copy of our eBook. Visit thegoodstewards.com for more info. Connect with us and submit any questions or topics you'd like us to talk about. See you next week.