Are you contemplating the idea of investing in student housing as your upcoming commercial venture? Large-scale student housing properties present an enticing opportunity, with potentially high rental yields and often guaranteed rent for a predetermined period. However, various crucial aspects need your attention – explore our top four tips below.
Balancing Cost and Value in Student Accommodation Investment
It’s crucial to strike a delicate balance between making a smart, affordable investment and avoiding spending so little that it could compromise your potential returns. If an investment appears significantly cheaper than others you’ve come across, there’s likely a reason for it. While it may seem like a bargain, it might not provide good value.
Could the property be located in a less appealing area or constructed with lower specifications than nearby counterparts? Students are often perceived as willing to settle for subpar living conditions. However, while they might tolerate a more rustic property shared with friends in subsequent years, large-scale student accommodations are mostly occupied by first-year students or ‘freshers.’ Many of these students seek comfortable living spaces as they transition into life away from home.
Identifying Your Prospective Student Tenant
The notion of students tolerating substandard living conditions is quickly becoming obsolete due to changing student demographics. Another category of students who typically opt for large accommodation blocks are international students, unable to physically inspect the property before relocating to the UK. Consequently, your property needs to appear attractive in photographs.
Moreover, these students are usually willing to pay for a quality lifestyle. Students financially capable of studying in the UK are unlikely to settle for inferior living conditions.
Understanding the Property Type
Small ‘student pods,’ which are non-self-contained apartments, are not perceived as individual units, and obtaining a mortgage for such a student accommodation investment is impossible. Conversely, a self-contained student apartment is mortgageable. Even if you’re purchasing outright, choosing to sell later could limit your options, as many potential buyers may need financing.
Deciding on Investment Management
The physical aspects of your investment aren’t the only things requiring consideration. If you’re contemplating student accommodation investment, thorough research into the developer’s reputation is essential, along with an understanding of the team managing the property. For the developer, take time to investigate their other projects thoroughly.
“It’s crucial to strike a delicate balance between making a smart, affordable investment and avoiding spending so little that it could compromise your potential returns.”
3 Comments
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