Real Estate Investing 101: Investing in Student Accommodation

Real Estate Investing 101: Investing in Student Accommodation

What is it? In university and college towns, students need to live somewhere. Investing in student accommodation typically means purchasing property and then renting it out to students. While many students choose to live in university-provided housing, there is often not enough space for all students in residence halls, and students may prefer living off-campus.

Being a landlord to a niche group of tenants can come with unique demands. Students are not typically long-term renters, they may not need the accommodation year-round, and they’re typically younger, less-experienced renters. This can come with benefits and risks!

What do you need to know?

· Universities often provide private landlords with incentive programs aimed to increase the supply of student accommodation. Registering with the student housing program can make it easier for prospective tenants to find you. Some universities handle the administration of leases collecting deposits, and managing payments, especially if accommodation is included in tuition fees. Some universities even offer financial incentives to landlords (especially if there is a shortage of student housing), such as renter’s insurance for students or insurance-like programs that cover renovation and repair costs for your property

· If none of these programs exist, or even if they do, you will want to consider having parents of students co-sign leases to ensure you’re not left hanging if a tenant decides to spend their whole rent check on beer one month.

· Location and real estate market. Students will prefer accommodation that is close to their place of study. Not every house in every neighborhood in a university town is going to work as student accommodation.

· Students have particular preferences. Typically, students want everyone wants - a clean and well-maintained place to live. Some students may prefer one-bedroom or studio apartments and there is a market for this, but as young, social beings buying multi-bedroom properties with excellent WiFi, large common areas for socializing, and private rooms for sleeping and studying is more typical.

· Turnover and repairs. These are two things you need to get used to. Student tenants tend to only stay for a couple of years or as long as their course of study. Students are also typically first-time renters and may not know how to look after the place they are renting. You need to expect the occasional wild party and unexplained repairs that you will need to make. Setting clear house rules, educating your tenants about their responsibilities, and looking into those university incentive programs mentioned above, can help you afford the additional expenses that renting to students might bring.

Is investing in student accommodation right for you?

As a landlord, you have to like people and be able to work with them. Having an affinity for young people, or at least trying to understand them, is a requirement for investing in student accommodation. For young real estate investors, house hacking and renting additional rooms to students or young professionals can be a good business model.

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