November 15th 2019
Last issue we began exploring a little less traditional forms of rental real estate, looking at vacation and tourist accommodations. Keeping in that same vein I’d like to today explore student housing – a rental option that has been very popular, especially here in Niagara with students from both Brock University and Niagara College needing places to stay.
At first brush student housing seems like a very lucrative option. Consider a house that accommodates 5 or 6 students, each paying around $500 per month and that adds up to a lot of rent, especially when compared with what the same house might generate when rented to a single family. But it’s not quite as straightforward as the math might suggest.
For one thing, there are a lot of expenses you will be absorbing as a student housing landlord, which would normally be passed on to the tenant. In a typical single family rental, for example, it is customary to have the tenant pay all utilities. This would include heat and hydro as well as cable. It would also include water and the rental of the hot water heater. When you own and operate student rentals, you as the landlord, would normally be responsible for these costs, and you will need to take them into account when you do a net cash comparison. Also lawn care and snow removal will generally be your responsibility whereas in most 
single family rental situations, the tenant takes on these tasks. Of course, if you own and operate a multi-family residence, duplex or triplex for example, some of those chores and expenses will come into play as well.
In selecting a property suitable for student accommodation you will want close proximity to the University or College, or at least on a convenient bus route. The number of bedrooms is critical as each student will want and expect their own. Basement bedrooms are fine, but a word of caution. If a basement bedroom doesn’t have a window large enough to exit out of in case of fire, it cannot be used as a bedroom. Pay attention to parking as well. Although not all students will have cars, in all likelihood there will be more cars on site than if you rented to a single family.
Financing can be a bit tricky as not all lending institutions will be willing to lend for student housing. Some will require that the property be within 1km of the school, others will require a minimum of 25% down. Be up front with your lenders and shop around.
Insurance too can be an issue. There is such a thing as student housing insurance. Ask about it. It may be that if you just insure the property as a rental, should something happen, the insurance company will renege on payment saying they were not told and did not factor in the higher risks.
Once the property is acquired and you’re ready to get operational there are some practical rental issues you need to be aware of. Some years ago a group of landlords took the City of St. Catharines to court over what they felt were discriminating practices aimed at stopping or at least controlling student housing. At issue was whether a ‘student house’ constituted a rooming house and required specialized zoning. Apparently the configuration of the lease was critical.
If all the students were on individual leases, the arrangement was deemed to be operating a rooming house and was not allowed in most residential zones. If all the students were on one lease, it was deemed to be the same as a single family dwelling, providing all occupants had access to all areas of the house. That’s the way to structure the lease. How they divide up sleeping accommodations is up to them.
It’s a good idea to run your lease on an annual basis from May 1st to April 30th. That seems to be the norm in St. Catharines. It’s best when you set up the rental if you can find a group who know each other and come in as a unit. Of course, things change. Often over the course of a year, one student may drop out. With a master lease make it clear that each one is responsible for full payment. They can find a replacement but they are each ultimately responsible to see that the rent is paid, as are their parents if you choose to require parental guarantees.
Finding students shouldn’t be too difficult. You can advertise on sites like Kijiji, but probably your best bet is to consult the off campus housing office or website of either Brock University or Niagara College.
One last thing. Stay on top of things. Remember you are dealing with young and often immature tenants, most of whom are on their own for the first time. They will need some rules and some oversight.
And like we said at the outset of our Money Machine seminars, as a general rule of thumb, the more lucrative the venture, the more challenges it will present. Student housing can be a very profitable venture but you’ll earn every penny.
Wayne Quirk, Author
“THE MONEY MACHINE”
wayneq@remax-gc.com