Looking to invest in property? Student accommodation seems like the golden ticket

25-Apr-2017

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Davis Miller is a regular contributor at many sites and mainly focuses on business and investment related topics.







Today’s buy-to-let investors have being introduced to a brand new type of asset class – student property. But is student accommodation worth investing in, and if yes, are the risks involved worth taking? There’s no plain answer to this question, although there’s crystal-clear evidence that student property has potential. If you want to buy property and you want to switch from residential to student accommodation, there are some things you might want to consider before spending any money.

First, you have to assess the market. For this type of asset class to yield high returns, you have to buy property in areas packed with colleges and universities; otherwise you don’t stand a chance. Location is key. Second, you need to perform a market analysis to make sure the people in your chosen area have an interest in renting rather than lodge in a campus dorm. Third, after you’ve settled on some priorities, it’s time to settle on a type of student accommodation: budget-friendly or high-end?

 

University accommodation – changing trends

In the past 5 years we’ve seen university accommodation change quite a lot. Young students now have higher living standards. They want to enjoy the perks of college life, but they also want to live in social areas and be near cafes, pubs, gyms, and restaurants. The demand for a social type of college life is increasing, thus offering investors the chance to invest in property that pays off big time.

However, even though things are looking great at the surface, there are hidden risks investors should know more about. To buy student pods, you need cash. Unfortunately, mortgage lenders are not very fond on this type of investment, meaning that it’s up to you to prove that it’s profitable. Traditional buy-to-let is all about buying property and rent it out to young couples and families willing to settle down. After 6 years, students will leave, and to a mortgage lender that’s not enough.

Student property options

Since many investors believe that student property can yield great returns, they’ve recently turned to a different type of property called “house with multiple occupations”, shortly known as HMOs. These houses are rented on a per-room basis to students, and the living conditions are of the highest standards. Students have their own private spaces; they have a kitchen and they can make new friends and socialize.

An increased demand for comfortable student accommodation

Universities may be able to cope with a students’ demands to get an education. Many even encourage foreign students to apply as well. But they don’t have room to accommodate all. On top of that, today’s savvy student doesn’t want to live in a dorm; the demand for high-end accommodation is increasing, too. Students no longer go to college with the mere thought of parting all night long; many want to actually study, get a degree, and then build a career.

We’ve seen many forms of investment fail over the years. But because increasingly more students choose to work and study, they can afford to live in rental properties. Priorities have changed, and even though the cost of living is high, that hasn’t stopped students from wanting to live comfortably throughout college.

Benefits of student pods

Student pods have become a very popular type of student accommodation, and increasingly more investors are looking into their potential. These blocks features single rooms for students, and many features shared kitchens. Managed by a landlord, pods more conveniently-priced than regular condos and flats. However, their main drawback is that they don’t have resale potential. Basically, investing in student pods is a long-term investment; they can’t be modified and made into a 3-bedroom type of apartment, for example. Before taking the plunge, you should be well-aware of the risks involved.

Bottom line is, every type of investment comes with a certain level of risk. Student accommodation Sheffield is no exception. But if you play your cards right and choose a good location, you can rent these properly out to students and keep them fully booked for years in a row. The key is to decide on a location in close proximity to core city colleges and universities.

 

 

 

 

 

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