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There are many different types of investment opportunity when it comes to buy to let properties, from large, detached family homes to young professional apartments in the city centre and student accommodation. We’re going to have a look at student accommodation opportunities and what the positives and negatives are depending on your circumstances.
Consider Your Investment Aims
People invest in buy to let properties for different reasons, some want to use a tenant to pay the mortgage whilst they wait for the property price to increase so they can sell it for a healthy profit whilst others aren’t as interested in the increase in property price and want a higher rental yield. With student properties you won’t see much increase in property value, it will obviously gradually increase over time but you won’t see any big changes in the same way that you might in up and coming areas. On the other hand however, if you’re looking to buy a cheap property and get much higher rental yields then it will be the best investment you could make.
Whilst average property rental yields are around 5-7%, student rental yields are anywhere from 10-18% meaning if you are looking to make money on your investment each month then that would be the perfect investment. Before purchasing any property it is important to get landlord legal advice to see what your rights are with your tenants.
What To Expect Whilst Managing The Property
Maintenance and upkeep on student accommodation tends to be some of the easiest around. Most of the time students pay for their accommodation either with a maintenance loan or their parents do and their lifestyle means that they aren’t too picky so you will tend to find they don’t complain unless something is very wrong like no hot water or a leak. This means that ongoing maintenance costs don’t tend to be too high. However, it is worth also considering that at the end of the year when they leave you will probably have to redecorate and do some maintenance before the next group move in. Overall, you will have less day to day issues but will have to do more once a year meaning it is much easier to manage especially if you have multiple properties.
Monthly Payments & Finances
Again, this is another positive to investing in student accommodation. As mentioned previously, students tend to have their rent paid for either by their parents or their student loan so once they have been approved they will have the funds to live there. Of course there are always circumstances where there are non-payers in which case you may need your landlord solicitors involved but generally you won’t need to go to court to get someone evicted, as they are only renting a room and are sharing the house with other people they will leave voluntarily to avoid embarrassment.
Overall, investing in student accommodation is one of the best opportunities around unless you are looking to make more money from the sale of a property in the future. Most of your income will come via your monthly rental yield on an ongoing basis rather than as a lump sum when you sell.