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  • Profile photo of KsanaKsana
    Member
    @ksana
    Join Date: 2009
    Post Count: 3

    Hi all,

    Just wondering if anyone can offer some pros and cons of investing in student-only accommodation, particularly apartments in inner-city Melbourne. I've seen some offered for as low as $165K, for 1 bedroom, 1 bathroom, kitchenette and no car park. Rental renturn is $999 pcm and rates/body corp $330/quarter. That seems cheap to buy in such a high-growth area! What bothers me is the fact that the rental market is so narrow. What are the growth opportunities for such tiny little apartments? The cash flow isn't too bad! I know that it may not be tenanted for a couple of months a year. Currently have $180K equity in an IP in Brisbane, which is finally cash flow positive after 6 years (we hadn't read any of Steve's books back then!) and this time we want to buy into something that is at least cash flow neutral.

    Maybe we could offer them $20K less than the asking price (if everything's ok after I've done my calcs). This apartment's been on the market for at least a month now.

    Any help greatly appreciated

    Thanks,
    Ksana

    Profile photo of dsmithdsmith
    Member
    @dsmith
    Join Date: 2004
    Post Count: 65

    Ksana,

    Though this may be in a high growth area, you certainly wont get high growth from a student accom. Though th returns may be ok, if you are looking for growth, steer clear of this one..

    Cheers

    Danny

    Profile photo of KsanaKsana
    Member
    @ksana
    Join Date: 2009
    Post Count: 3

    Hi Danny,

    Thanks for your reply.
     I can see that there are quite a few on the market – there's not enough scarcity value.
    Any ideas on what kind of growth can be expected compared with no-student accom? The apartment is in Carlton.

    Cheers,

    Ksana

    Profile photo of dsmithdsmith
    Member
    @dsmith
    Join Date: 2004
    Post Count: 65

    Ksana,

    I wouldnt like to put a figure on it but I know it would be minimal growth if any. If it is worth 150k today, it may be similar or a little bit more in 5 years or so. There are plenty of student accoms in Carlton.

    Kind Regards
    Danny

    Profile photo of lccorp1997lccorp1997
    Member
    @lccorp1997
    Join Date: 2009
    Post Count: 5

    by student accomodation i guess you are referring to those in which the terms of the lease explicitly state students only

    in a similar vein to the previous question,
    there are apartments in serviced apartment complexes being rented out privately as separate normal residential units (long term lease etc). to all extents no different from any other apartment just that its located in the complex. im staying in one myself right now…

    these shouldn't be any different growth-wise from the norm, ya?
    any opinions on those?

    Profile photo of Jeff.GJeff.G
    Member
    @jeff.g
    Join Date: 2009
    Post Count: 4

    Hi Ksana, if you're interested I can point you to an investment property that will give you a monthly return as well as capital growth.

    Profile photo of Jeff.GJeff.G
    Member
    @jeff.g
    Join Date: 2009
    Post Count: 4

    According to my profile, I'm not accepting emails.  email me at itsmeflash at yahoo dot com

    Profile photo of SarahSarah
    Participant
    @sarah101
    Join Date: 2015
    Post Count: 10

    Pros
    Greater Yield
    Vacancy risk spread across multiple tenancies
    Often can be positively geared very quickly

    Cons
    More wear/tear/maintenance
    Remember to factor utility costs into rent
    More labour intensive means you almost have to use a property manager or you’ll go insane!

    Profile photo of Nigel KibelNigel Kibel
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    @nigel-kibel
    Join Date: 2005
    Post Count: 1,425

    If you are talking about small apartments then do not touch them

    There are over 4000 apartments coming out of the ground in Melbourne alone so the only way the values go will e down with less tenants. The only student accommodation I would consider would be a house where you can rent rooms because it can be sold as a house

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    Profile photo of SarahSarah
    Participant
    @sarah101
    Join Date: 2015
    Post Count: 10

    If you are talking about small apartments then do not touch them

    There are over 4000 apartments coming out of the ground in Melbourne alone so the only way the values go will e down with less tenants. The only student accommodation I would consider would be a house where you can rent rooms because it can be sold as a house

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    Agreed, so long as you don’t bastardise a house by splitting rooms/modifying it beyond recognition as a “family home” etc it will always hold the underlying value of a residential property so there’s always that fall back.

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