How to Manage Purpose-Built Student Housing in Uncertain Times
By Mitch Towbin October 27, 2022 7:41 am
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When it comes to student housing issues, the numbers don’t lie. According to a survey of 195,000 students by Temple University’s Hope Center, more than a quarter of students at community colleges and 16 percent of students at four-year universities said that they couldn’t meet their rent or utility bills in 2021.
Furthermore, findings from the National Student Clearinghouse Research Center state that enrollment across U.S. public and private colleges fell 4.1 percent annually, to 16.2 million, in the spring 2022 term — which has led to students breaking their leases. More alarming, a study from the University of Florida found that the top reason students drop out is that their rent almost equals their tuition — and the waitlists for on-campus housing at universities nationwide only continue to grow.
Finding qualified renters, keeping occupancy numbers up, and ensuring that properties are protected from damages and rent default are all common pain points for the average multifamily property owner and operator. However, one specific niche of the sector faces an even more nuanced set of challenges: purpose-built student accommodation (PBSA).
Student housing is built specifically by private developers for college and university students to live off-campus — and, while many traditional multifamily properties may rent to students, student housing is accompanied by unique challenges. Units are rented by the bed, rather than by the apartment or room; students do not work regular jobs; many have either no or low credit; and most typically have no prior rental history upon which an apartment owner/operator can base its risk assessment during leasing. It is instead most often the parents and guardians of these students who are being underwritten as guarantors on each lease.
However, student housing operators exist specifically to help students secure accommodations, and must find a way to provide them with rental housing options while protecting their NOI. With the right strategies, owners can ensure a mutually beneficial process for all:
Build relationships. This is always a crucial part of the leasing process but it is especially important when leasing to students, as both the renter and their parents are experiencing a massive life transition and emotions are running high. It’s important for student housing operators to identify the decision maker within the family and coordinate the lease primarily through that contact — using empathy and compassion and being ready to meet the renters and their families where they are in this process.
Focus on customer service. Having a customer service team readily available, ideally every day, is important to give students and parents peace of mind and a feeling of immediate accessibility — particularly when it comes to international students addressing concerns. Student housing owners and operators with the capabilities to communicate with families of students who may not speak English will find this an excellent way to demonstrate commitment to the well-being of their renters. The more resources parents and their children have at their disposal to solve issues — whether near or far from each other — the better.
Bolster your tech solutions. New real estate technologies are constantly being developed, and it is vital for student housing operators to keep their finger on the pulse of effective tech platforms being introduced to the market. Investing in technology platforms that manage lease issues, rent payments, maintenance requests and more can ensure operators stay ahead of the curve and cater even more to the younger demographic. Similarly, taking advantage of financial amenities such as lease guarantee services and security deposit replacement solutions can help increase occupancy, as well as affordability and accessibility for student renters.
Prioritize flexibility for students and their parents. Needs of owners/operators and renters alike can change in the drop of a hat — we can never predict exactly what factors may affect a lease, a student’s ability to pay rent, or unforeseen damages. Having a flexible insurance solution is integral to protecting both parties throughout the lease term, and using a provider that offers a wide range of coverage customizations also allows property owners to adequately protect themselves.
There are many opportunities to innovate within the field of purpose-built student housing. By implementing these strategies, operators will be able to minimize their risk, approve more qualified student renters (along with their parents), and call themselves modern housing solutions providers.
Mitch Towbin is vice president of strategic partnerships at TheGuarantors, a financial and real estate technology company offering lease guarantee and security deposit replacement tools.
