Investing in Student Accommodation | How to Get a Room for Rent!

Posted by Picasoth on November 26th, 2020

Many investors have at one point or another considered investing in student accommodation. While it can sometimes seem very attractive with low entry costs and high rental returns, these investments also have a good percentage of minuses to be aware of. Do you like the sound of average rental returns? What about a positive cash flow return? Or better yet, the purchase price is low? Sounds right?

These are just a few of the many benefits of investing in the room for rent in Melbourne. Unfortunately, in our experience, the gospel stops here. Investing in student accommodation has its downsides, which must be weighed against the potential benefits before embarking on this course.

Higher Costs

Student tenants often require additional security, living items, silverware, bedding, and more. and full furniture. In addition, an increase in rental clothing for students could mean more frequent replacement of furniture and household items and increased maintenance costs. Property management fees are also more expensive because you have to manage multiple tenants in situations where many people share the property.

Increased Turnover and Vacancies

Be prepared to accept a constant exchange of short-term rents, and the property may be vacant when many international students return home during the holidays at the end of the year. Some tenants may continue to rent during this period, but conflicts between tenants and homesickness are a common problem and will increase regardless of tenant turnover.

Extra Hassles

Multiple tenants on a single property represent multiple leases that are more complex in themselves. Also, expect each tenant to push them out on a regular basis as student tenants are slow to pay their rent. These tenants may not take care of the property as well as the young couple or family, so care and cleanliness will be a big issue. You will also need to check if a regular insurance policy will suffice or if some municipalities may have different requirements for properties that have more than one private lease. You may also have difficulty getting the right loan.

Poor Capital Growth and Resale Prospects

Falling into the worst situation so far is a great opportunity for minimal capital growth. In many cases, room for rent is associated with short-term cash flow at the expense of long-term growth. This is a place market that only attracts a very small number of people. So when it comes time to sell, it can be very difficult for you.

By eliminating occupants from the potential buyer pool, you limit your market by about 70 percent, but if you eliminate all permanent investors who don’t touch student accommodation, that number increases even more. This limits your resale value by reducing competition and customer demand.

Verdict

In general, there are people on both sides of the hurdle when discussing that buying student accommodation is a good investment. Although it has some advantages and may work well for some investors, in general, these investments are risky and often do not pay off in the long run, especially for student accommodation. for private investors.