All Topics / Help Needed! / student accomodation

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  • Profile photo of HectorHector
    Member
    @hector
    Join Date: 2004
    Post Count: 7

    Hello.
    Just wondering if anyone had any opinions on purchasing a property solely for student accomodation. I have found a property in Christchurch New Zealand which I am quite interested in. With its depreciation register it provides good pos cash flow. It is still being constructed. Would welcome any comments.
    Thank you.
    Hector.

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    I do it. Please email me or post any specific questions.

    Cheers,

    Simon Macks
    Mortgage Broker
    http://www.mortgagehunter.com.au
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of kay henrykay henry
    Member
    @kay-henry
    Join Date: 2003
    Post Count: 2,737

    Hector,

    If the building is still being constructed, I am wondering if it’s an OTP apartment. And have you been informed by the developers or RE agent, that it would be suitable for student accommodation?

    Just remember with OTP’s, that they need points of differentiation from other OTP’s to maintain their “value”.

    If you are wondering what students are like as tenants, well, I believe they would be similar to other tenants- but perhaps younger, and perhaps with some inexperience of living out of home. I guess there are different “types” of students- those that live to study… and those that study between partying.

    Hector, what are your concerns?

    kay henry

    Profile photo of AceyduceyAceyducey
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    @aceyducey
    Join Date: 2003
    Post Count: 651

    Hector,

    It’s good you are researching this area as some people I know tried to go into it with a belief that students were simply standard renters with less money….and got burnt quite badly. It’s dangerous to make this type of assumption!!!!

    Some points to bear in mind:

    – There are good and bad times to have your property available for rental to students. As students tend to all start uni at the same time you need to have the property ready for tenancy at this time or you run a higher risk of ending up vacant for a semester, or even an entire year. There is literally a two week or so rush for accomodation at the start of the scholastic year.

    – Many students rent for the uni ‘year’ and then end their rental & go home for a month or two. So be prepared to weather a higher vacancy rate than with standard rentals.

    – Try to locate a property that is just as attractive to non-students as it is to students. This reduces your risk of higher vacancies or issues should other providers build more atttractive specialised student accomodation nearby.

    – Students generally prefer not to live alone. One bedroom units are less attractive to many students than 2+ bedroom units…and generally cost them more as well (it’s cheaper to share rent & food expenses).

    – There is often a shortage of low-cost student accomodation…and many unis & other tertiary education institutions have rental officers or departments who assist students in locating appropriate accomodations – make sure you speak with these people so that they can refer student renters to you!

    – If you want to do REALLY well out of student rentals, look for creaive solutions…..ways you can rent by the room, partially furnish for overseas students (desk, bed, drawers, etc) or otherwise create a more student friendly space.

    – Students are more likely to make properties wear hard. This isn’t saying they’re any more destructive than other tenants, but wear and tear on a property can be significantly higher. Make sure you fit out properties with hard wearing carpets & fixtures.

    For more comments on the topic from people who’ve done it, visit http://www.somersoft.com/forums/showthread.php?t=9549&highlight=Student+Accomodation

    Cheers,

    Aceyducey


    In theory, there is no difference between theory and practice. But, in practice, there is.

    – Jan L.A. van de Snepscheut

    Profile photo of PepperPepper
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    @pepper
    Join Date: 2004
    Post Count: 48

    Hi Hector,

    I have to agree with Aceyducey on this one. Students are not necessarily like most renters but with less money at all, in fact many of them probably have more money than you and me put together and are only over here in this country to get the degree which they would otherwise wouldnt have gotten back in their home country!!!

    International student fees are substantially higher than aussie students and as such many of these overseas students are not hard up for a quid!!! True they will do whatever they can to save money and many of them are happy to live out of a single room in a house full of other students and will do so for many reasons, including proximity to uni as many may not drive. So at least you dont need to provide car spaces.

    Pepper

    Profile photo of kay henrykay henry
    Member
    @kay-henry
    Join Date: 2003
    Post Count: 2,737

    Just a few points to add. Many International students are in Australia and have loans to cover their tuition and living skills from their home country. These loans are at market rates, and many students do have student poverty whilst in Australia. I think it’s a myth that International students are generally wealthy. Also, exchange rates have a large effect on International students’ ability to study. Often, as our dollar increases in value, another culture’s currency might decrease, meaning the money they’ve budgeted for whilst here, is now not sufficient.

    I am not making these points so that people might see International students as a “risk”. Rather, I am just debunking some myths that are commonly stated about these students.

    kay henry

    Profile photo of MonopolyMonopoly
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    @monopoly
    Join Date: 2004
    Post Count: 1,612

    Hector,

    Apart from talking to experienced “student accomodation” property investors such as Simon (MortgageHunter) and Jars11 from this site, I would recommend you do a search under “student accommodation” as I am sure this topic has been covered before.

    I also agree with Acey in that students are ‘seasonal” to some degree (no pun intended) and as such you need to take this into (vacancy rate) consideration.

    I have had students renting from me before, certainly not in a “room by room” set up, with both positive and negative results, as may occur with any tenant. Their needs are somewhat different to normal family/singles types, as stated by Pepper, many of them don’t drive hence you may not need to provide car garaging/spaces, and/or may wish to supply internet access, but all in all, they are no more “riskier” than anyone else.

    Cheers,

    Jo

    Profile photo of DerekDerek
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    @derek
    Join Date: 2004
    Post Count: 3,544
    Originally posted by Hector:

    Hello.
    Just wondering if anyone had any opinions on purchasing a property solely for student accomodation.

    Hi Hector,

    I would be a little concerned if the property was ‘solely’ for students – you need to have a ‘fall back’ position.

    If you cannot find a student tenant what are your alternatives? One of our properties has had students in it for the duration but it is also suitable for a standard tenancy.

    We let our property furnished with TV, beds, dining & lounge settings, white goods etc.

    Our lease agreements are structured for 12 month periods and expire just prior to the new year rush – this helps to reduce the possibility of mid year vacancies.

    Derek
    [email protected]

    Property Investment Support Available. Ongoing and never stopping. PM welcome.

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    Hello Folks,

    After getting back from Melb I finally have some time to add a little of my ideas on this.

    Remember Steve discussed improving yields and solving a problem to increase value? This is what I did.

    Last Oct I bought a 40 yr old solid brick home 400m from the uni for $315k. It was an absolute shambles cosmetically – I mean absolute – but solid and structurally sound. I discovered a one metre brick wall on the front boundary after cutting the lawn! I think I got it under value for this reason and also because the agent was distant and advertised sporadically etc. The owners were OS and didn’t realise the agent was not close I think.

    Anyway we tidied it up, cleaned the carpet, painted the ceilings + walls, removed rubbish from the yard, changed a doorway, added a $3000 kitchen and painted the bathroom. We spent $7K and ended with a five bedroom home. We took a home which would rent for $200 in that conditon or $270 cleaned up, leased rooms individually to students and now receive $515 pw rent – poss more next year as the rooms were immediately snapped up and looking back I think they were cheap.

    There is a lower quality 5 bedroom student house nearby in the same situation on the market now for $429K and I hope they get it.

    I don’t think I would choose a purpose built student place. That is buying the solution. I also think you limit your potential to do other things in this case. Our home can always be easily rented or sold to a family should the student market dry up for some reason.

    Hope this helps generate some ideas.

    Simon Macks
    Mortgage Broker
    http://www.mortgagehunter.com.au
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of sunshinesunshine
    Member
    @sunshine
    Join Date: 2003
    Post Count: 63

    I do it slightly different as I am close to the uni and single…but it may be food for thought for someone. I have homestay students that come and stay with me for a month or so, paying $170 per week for board. When they are ready I funnel them into my investment property if there is a room available, for a cheaper rate of $120 per romm/week. no garage required so I converted that to bedrroms and now have 6 bedrooms. I only take girls, mostly chinese or japanese as they don’t like to share with boys, want their own space and very rarely venture out of their rooms. But they do want lockable doors, TV, broadband (Broadband is an extra charge of $10/week. Each room has a phone connection but they must connect up themselves if they want a phone (they often need help to do this) so it runs along the lines of purpose built student accomodation, which I funnel the ones I cannot put up into, but they don’t like signing 46/52 week leases. Unis have plenty of summer students, not to mention english courses they need to pass before starting uni. I like managing them myself and care about ‘my girls’ as I have found that the new foreign female student with poor english needs a bit of help. I also find that their parents like to know they are safe.
    The purpose built accomodation here (Gold Coast books out fairly solidly as it is often difficult for me to find some students accomodation, at the same time there seems to be a turn over in unit owners, so something mustnt be quite right – perhaps management. Poor management would have a big impact on the success of the unit.

    Profile photo of AceyduceyAceyducey
    Participant
    @aceyducey
    Join Date: 2003
    Post Count: 651

    Sounds like a great business Sunshine….you could franchise that sort of thing :)

    Cheers,

    Aceyducey


    In theory, there is no difference between theory and practice. But, in practice, there is.

    – Jan L.A. van de Snepscheut

Viewing 11 posts - 1 through 11 (of 11 total)

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