What You Need to Know About Requiring Guarantors From Your Student Rentals

By Aaron Swartz on September 11, 2022

Apartment management is a great way to make money, but there’s one question that has more importance than any other for your business: who should you rent to? If you own property near a college then renting to students is likely a common practice; they’re a reliable source of income every year, but come with a few flaws. Due to being in school, college students may be a risky investment, as they might not be able to meet their rent payments on time, or may not have a steady income. One of the best ways to get around this issue is to have your student tenants utilize a guarantor, so you can be sure of being paid while taking advantage of the lucrative prospects of renting to students. To help you set this all up, here are our top tips for requiring guarantors from your student rentals.

Photo: Pexels

What Is A Guarantor?

It’s likely you know this one already if you’ve done much renting before (on either the tenant or landlord side of things), but it’s important to cover if you’re unaware. A guarantor is essentially another person who is included in a lease alongside your tenant for the express purpose of guaranteeing you get your money. In the event your tenant misses a rent payment, the guarantor signs up to foot the bill and pay you what you’re owed. Oftentimes, guarantors are family, friends, or even employers of the prospective tenant, though there are also third-party guarantor companies that can step in. Guarantors are incredibly common parts of renting for anyone who has poor credit, little or no income, and very little savings (like students for example). If you’re interested in renting to students then requiring they have a guarantor will ensure you’ve made a safe investment and will see a return.

Why SHOULDN’T You Require Student Guarantors?

Short answer: there isn’t any reason. Requiring your student renters to have a guarantor will have no significant repercussions on your business. While there are anti-discrimination laws in place when it comes to renting properties, so long as you are not refusing housing on a discriminatory basis you should be in the clear. While the requirement of a guarantor may cause some potential student renters to dismiss your property, most others will have to deal with the same need from other renters, so all in all it won’t hurt your practice.

How Do You Require A Guarantor?

Ok, so you’ve decided to require guarantors from your student tenants. Now what? Well, it’s fairly simple, just begin adding it to your qualification requirements as you would any other important matter. In the same way you require a certain level of income and a certain number of references, add the requirement of a guarantor. For apartment applications, you can also ask a question about whether or not the party in question has someone they can use as a guarantor. It’s really not too complicated.

What To Look For In A Guarantor

Now that you’ve begun requiring guarantors for your student renters you have to ask yourself the question: what do I need to require from a guarantor? Typically there are a few important things you need to look at when deciding if a guarantor meets your requirements.

Credit Score: While most landlords require tenants to have a credit score of 600 or more, the minimum tends to be a bit steeper with guarantors. Most renters require a guarantor to have a credit score of at least 700 to make sure they have exemplary credit.

Income: Generally a renter is required to make around 2.5 to 3 times their rent cost a month to ensure they can cover their rent. With guarantors, this again tends to be higher. As a rough average, many landlords require guarantors to make between 6 to 8 times the cost of rent per month. This is to ensure they can cover their own financial costs as well as the potential expense of covering the rent of someone else.

Locations: Collecting rent can be tricky when your tenant is far away, and the same goes for guarantors. Many landlords require guarantors to have a domestic residence in the country their cosigner is renting, and some may even require they live within the vicinity (for example the tri-state area). It’s definitely worth considering for your own requirements.

Student rentals are lucrative but risky, and guarantors can be a huge help in alleviating that risk. By making the choice to require guarantors from your student renters you’ve signed up to enjoy the benefits of renting to students while avoiding the major downside of possibly losing money. With these tips, you’re prepared to begin renting out your properties for the next batch of college students, without having to worry about making back your money.

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