Oxstones Investment Club™Conventional buy-to-let investors are recently reconsidering their options and becoming more interested in student accommodation. Many see potential in this new form asset class because increasingly more teens want to go to college, get and degree, and then focus on their careers. Some students can’t afford to live alone, or don’t want to live in a dorm. In this case, they choose to get a degree and a job at the same time to make ends meet.
But before buying property to rent to students, enthusiastic investors should perform a thorough market analysis. It’s fundamental to buy property located in close proximity to the best colleges and universities in the area. Keep in mind that most students won’t want to commute, and they will want to get to classes in time without too much hassle. After you’ve settled on a location, it’s time to see how many people might be interested to invest. Do the colleges and universities located nearby have enough room to accommodate all their students? Do they welcome foreign students? Make sure to get these answers before moving forward.
Changing trends in student accommodation
Very few universities and colleges across the country afford to invest in new dorm rooms for students. And even if they could afford to do it, they won’t because students now have different standards of living. They no longer want to share a room with a roommate. Many would rather rent a condo, live with 4 colleagues, pay a little more on the rent, but have their private space. As a consequence, student property investing has developed. The demand is extremely high, and investors have become more aware of this fact.
But then again, it’s tough for an investor to get the funds and start buying property to rent to students. Many mortgage lenders don’t see potential in student property; they’re too old-fashioned and still believe that buy-to-let yields the highest returns. In 6 years, students will leave – that’s how they judge things. They’re definitely missing out the bigger picture, meaning that it’s up to you to convince them that there’s great potential in student accommodation.Experienced investors who know the buy-to-let market very well strongly believe that student property is worth considering. A new type of property they’re looking into is called a HMO (house with multiple occupations). Basically, they can purchase a house to multiple rooms; rent the rooms to students and offering them excellent living conditions – private spaces, baths, kitchen, and the chance to socialize and meet new people. To an 18-year old this might be their golden ticket to a dreamy college life.
The perks associated to investing in student property
One of the best ways to gain exposure in the real estate business is to buy property and then rent it out to students. This rather new type of asset class has proven to be extremely profitable. But it needs to be done right. Too many investors are focused on yielding high returns from liability and joint leases, which basically makes the tenant responsible for both rent and damages. If you’re sure it’s time to choose a different type of property, and focus on student accommodation, keep in mind that the most important elements is to choose your location properly.
To preserve the demand for student accommodation, you have to settle on properties located near main campuses and universities. Students hate to be isolated, not to mention that commuting costs are high and they can’t afford them. Keep things transparent and take good care of your tenants, too. This way, they might want to rent long-term. The average students spends between 4 and 6 years in a rental. Chances are that even at the end of their academic year, they might get a job in the area and keep your property occupied.
The housing market is constantly changing. In university cities, the main focus should be on student property. There are high returns on investment provided that investors spend time maintaining them in proper condition. If you can do that, then there are high chances that your initial investment pays off. Choose the best location and select tenant property to keep risks to a minimum.
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