The student housing market is dynamic and ever-changing for property managers and investors. With diverse accommodation options, your property management company can accommodate local student housing supply and demand in many ways.
However, all student housing falls under two large umbrellas: long-term rentals and short-term rentals.
Deciding between the two is a high-stakes decision, and choosing one to focus on can be difficult. Both offer unique benefits and challenges and require careful consideration. We've done the research to make the process easier for property owners.
Before we get into the pros and cons of different monthly rentals, let’s first define long- and short-term rentals and how their leasing cycles differ.
Short-term rentals typically refer to leases shorter than 30 days or a month. These properties are popular among seasonal tenants, students, and digital nomads. Think of a vacation rental with a separate entrance and furnished living space.
Short-term rentals also differ from state to state. For example, a short-term rental is any rental period under 30 days. In New York, short-term rentals are less than 90 days.
On the opposite end of the spectrum are long-term rentals. Long-term rental property involve lease agreements that last longer than a year. These types of rentals are great for students staying in town year-round and who want to live comfortably without moving between monthly rentals.
Short-term rentals can be pretty appealing if you own a property management company. Here are some of the most talked about pros.
Short-term rentals generally see higher yields because of flexible pricing models and higher earnings per rental unit. Property managers can match their rates to seasonal demand, ensuring dividends match local supply and demand trends.
Short-term rentals come with much shorter lease agreements. It’s very similar to how you would manage a vocational rental. These types of leases are much easier to manage and may reduce the likelihood of prolonged disputes over payments or lease violations.
Seasonal demands change. However, adapting to these seasonal changes is much easier with a short-term rental. There’s less of a chance that you’ll be stuck without tenants. For example, you can cater your properties to interns during the summer and exchange students in the fall.
Few things have no cons, and short-term property rentals are no different. Here are the most common downsides we’ve seen from our research.
High tenant turnover, unfortunately, comes with its fair share of wear and tear. Regular maintenance between occupancies is a must to keep units presentable and functional, which can add up quickly when compared to extended stay monthly rentals.
Short-term rentals habitually disrupt the local sense of community in residential neighborhoods. Temporary tenants unfamiliar with community norms may inadvertently cause issues, such as noise complaints or misuse of shared spaces.
Addressing these concerns requires proactive communication with neighbors and tenants alike and can make the job of being a landlord difficult.
Short-term rentals demand more time and personal investment from property managers and property owners. Property owners have to monitor seasonal changes and property trends constantly.
Marketing vacancies, screening tenants, preparing units for new tenants, and checking in and out all take a lot of effort. Property owners with multiple short-term rentals often benefit from having dedicated managers to keep up with short-term rental demands.
Proper support and resources are a must.
Because short-term rentals function similarly to vacation rentals, tenants generally expect timely replies to inquiries and issues. With limited time in the property, delays can have a heightened impact on the overall experience.
This is especially true for fully equipped and furnished properties. People want immediate help if issues arise with any essential amenities. If they don’t receive the help in time, they’re apt to leave, which is bad for your business and reputation.
Meeting these expectations requires a reliable maintenance team and quick turnaround times, adding to the operational workload.
Next, let’s examine the pros of longer-term rentals, which are often considered a more strategic rental investment than short-term or vacation rental properties.
One of the strongest advantages of these types of rentals is their predictability. Tenants commit to a certain time with a rental unit, ensuring a consistent rental income for a predictable period.
Knowing that a unit will generate a steady income for an entire year or more allows property managers to establish accurate financial forecasts and allocate resources more effectively. It reduces a lot of the uncertainty that is more common with short-term rentals.
This stability is especially valuable in student housing markets, where demand may fluctuate with the academic calendar.
Long-term rentals attract tenants considering an extended stay, who want to live comfortably, and who want stability. These tenants often bring a sense of reliability, ensure consistent cash flow, and reduce the risks associated with frequent tenant turnover.
Long-term monthly rentals significantly reduce property managers' day-to-day responsibilities. Once a tenant is in place, there’s no need to continue marketing the unit or vacation home or screening new tenants. You’re guaranteed an extended stay.
Managers can redirect their time and resources toward improving the overall living experience, ensuring the property remains attractive to current and future tenants.
Less turnover also means lower operational costs, as the need for cleaning, repairs, and advertising between tenants is much less. This is particularly beneficial for owners managing multiple monthly rentals in different sectors.
Unlike short-term rentals, which often require fully furnished units to attract tenants, long-term rentals typically allow tenants to furnish the space themselves.
Doing this reduces initial setup costs for property managers and lowers ongoing maintenance expenses associated with wear and tear on furniture and appliances.
By eliminating the need to update furnishings regularly, property owners can focus on other property enhancements, such as energy-efficient upgrades or improved security features, which can add long-term value.
A security deposit acts as a safety net for property managers. It ensures you're covered for potential damages, cleaning costs, or unpaid rent, reducing financial risk. It provides an additional layer of security for student housing, where tenants may be renting independently for the first time.
Property managers can sometimes require co-signers, such as parents or guardians, to further ensure financial accountability when renting to younger or less experienced tenants.
It’s important also to consider the cons of longer leases. Once you understand them, you’ll be much better equipped to make smart student housing investments.
Long-term rental agreements often include clauses restricting how often and by how much rent can be increased. While this benefits tenants, it can limit property managers’ ability to respond to market changes or adjust for rising operational costs, such as maintenance, utilities, or taxes.
For example, in areas with rent control laws, the ability to increase rents may be capped annually, creating a gap between potential revenue and actual expenses. Over time, this can impact the property’s profitability, requiring careful financial planning to mitigate.
A significant drawback is their reduced flexibility. Once a lease is signed, the property is effectively locked into a specific use for the duration of the agreement.
It can be challenging to adapt to sudden changes in market demand, such as a shift toward short-term rentals during peak academic seasons.
Additionally, long-term leases limit property owners’ opportunities to reallocate units for personal use, renovations, or alternative rental strategies without facing penalties or breaking contracts.
Even with the perceived stability of long-term rentals, payment issues can arise. Tenants may encounter financial hardships, leading to late or missed payments. In some cases, resolving these issues requires legal action, which can be time-consuming and costly.
Property managers should conduct thorough tenant screenings, including credit and employment checks, to mitigate this risk. Offering flexible payment plans or incentives for timely payments helps maintain positive tenant relationships while ensuring consistent cash flow.
Both long-term and short-term rentals have their place in the student housing market, and the right choice depends on your specific goals as a property manager or investor.
Short-term rentals offer flexibility, higher potential cash flow, and adaptability to seasonal demand but require significant effort and resources. Longer-term rentals provide stability, consistent income, and reduced operational demands but may need more flexibility and growth opportunities.
By weighing the pros and cons of each approach, you can align your strategy with the unique needs of your market and achieve a balanced, sustainable approach to managing student housing.
Ready to make the best choice for your investment portfolio? Partner with College House, comprehensive data analytics to grow your student housing business. Book a demo today!
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