Student apartments – positively geared

Hi there

Student apartments rarely make for good investments.

Banks don’t like them – and will restrict you to loans of 70% and less.

There’s usually bugger all capital growth.

The rental yields seem ok on the surface – until you look into the management fees.

Cheers

Jamie

Good thoughts already !! Kudos.

Though your Title refers to apartments, I’m replying below as though this is shared accommodation in a house – most of these could apply to an apartment too….

Add to that the numbers may look really good with (say) 4 students paying $160 a week – beauty $640 a week instead of $450 to a family group. But wait – factor in
a. not all weeks of the year have students staying (subtract the weeks they WON’T be there, or find a stop-gap for those weeks – or lose the rental!!)
b. extra management with 4 different groups ending tenancies at once (better find four new ones!!) – four bonds, four personalities, four times the chance of people “falling out” (i.e. loss of rental until replaced, but most other students locked in for their year already – so a very limited market).
c. need to provide furnishings, then repair/replace as required.
d. any extra compliance issues (check the new housing plan if Brisbane – some changes there).

So yeah, some opportunity, but certainly some headaches too. Work it through carefully,

Benny

Hey Pati,

I agree with the general consensus.
Student apartments is a risky investment and generally does not give a very good return.
There are so many factors that needs to be considered. These variables adds to the risk level of the investment, with more variables to keep in mind, chances are, Murphy’s Law will do his work.