Hi guys, not sure if it belongs here or real estate but I'm more interested in the financial side -
What are your thoughts on a student apartment as an investment property? They're bouncing around between $80-110k, usually returning around $8-10k in rental income.
It would be great to hear from anyone who's got one and their experience / thoughts so far.
sound too good to be true then it is not true and not good….
are you talking about unilodge?
Yup - there's UniLodge, UniSity etc - generally rented out at around $200/wk.
im interested in SinCity… must have a VERY good rental income :P
capital gains won't be as good as 'regular' properties, and harder to finance.
limited options to add value.
Capital gains?
'What capital gains?' said every student apartment owner.
Hello
From experience, if you're looking to rent out apartments to students I would be very wary and have proper insurance.
Damage, smoking, parties etc
Also, some mainstream lenders don't/won't lend for apartments that are under 50 or so sq mtrs or if they are a bedsit. Mainly because the on-sell buyer is generally restricted to student occupancy.
Prob better to erect a granny flat with separate access and facilities etc, then take a "self managing boarder"
Where are you getting the $8-$10K return from?
There may be long periods where it's vacant - eg Nov- Feb when students are on holidays.
The ones I've seen are managed apartments, so check the monthly/quaterly strata rates carefully.
They're relatively cheap because they're so tiny that banks won't allow loans using their usual lending criteria. The ratio of deposit to loan amount is much higher than that of a normal home.
That in turn, also means that when it comes time to selling it, it will be more difficult to sell because of buyers' ability to get a loan.
There's also very little capital growth on these apartments so your only return on the investment will come in the form of rent only.
Just rental income; most seem to be advertised or rented for $200/wk - and agree with all your points, I'm beginning to see why they're so inexpensive.
As above posters said, massive strata, massive management fees, no capital growth, high vacancy, possibly careless tenants.
Very difficult to sell. High likelihood of flaky tenants. Hard to get a loan for. I'd avoid.
Yup I'm beginning to see dozens for sale, and they seem to be changing owners every 5 years or so.
I own 2 student houses - Where rooms are rented out to students - both houses have 3 bdrms and rental is charged at 180 and 220 per week. These student housing are a good idea for investment if you have the money without needing to borrow, there is little to no capital gain. I've owned the 2 for almost 2 years now and the longest where I've had a vacant room is 2 months. Rental after expenses is around 10-13k.
Thanks for this - do you manage the property yourself as well? Or use an agent / manager? Any pitfalls worth considering?
Yea I manage the student ones myself. I fell into the trap of furnishing the apartment for higher rent last year and it was a pain to replace stuff at the end of the lease. I'm pretty lenient with rental payments but it can get annoying when they pay you at different times during the month.
that google chrome users might be talking about different things, he own a house and lease out by himself to students.
unilodge, you need to use them as a property manager, i believe.
I looked at student apartments a while back. I have a fairly high appetite for risk but walked away. Lack of capital gain was one issue and as others have stated, they are hard to on-sell.
I lump it in the same category as over-55s complexes & retirement village apartments.
You'd be better off buying a CBD parking spot for similar money but a smaller rent.
Speaking as credit advisers we've seen the following pros and cons with cheap student accommodation:
PROS:
CONS:
Hope this helps.
Years ago was checking unilodge and at one day there were like 15 to 20 units for sale, in the same building. Good luck selling them.
What are these student apartments? This is a 10% return, sounds too good to be true.