Why student housing is appealing
1. Higher Returns
Student rentals are often rented out per room, which can result in a higher rental return for the landlord. Since students require ease of access to campus as a priority, they are often less demanding with regards to other physical aspects of the property. Students are therefore happy to share common areas such as lounges, kitchens and entertainment areas provided the rent is affordable and the property is within easy access to campus.
2. Fewer vacancies
Seeing as there is generally a high demand for student accommodation compared
to the supply provided by tertiary institutions, investing in these kinds of properties
is recommendable. This means student accommodation offers low-risk option in
terms of vacancies.
Appealing to the student market
To ensure that the property is appealing to their age demographic, Wi-Fi with good
streaming capacity is a must. A dishwasher, washing machine and tumble dryer are
also valuable drawcards, and a good entertainment area would be an attraction too.
Finally, remember to think like a parent. What features would you want to see if you
were leaving your child in your property? Security is a must, with either
alarm systems or security gates an absolute necessity.
What are the risks?
This type of rental income does pose other risks, such as short-notice lease
terminations and the possibility for neglect and damage to the property. However,
this can be avoided provided the correct safeguards are put in place to protect the
investment value of the property.
1. Lack of maintenance
Given that students might not keep the property as tidy as a family would,
wear and tear is probably the biggest risk these rentals carry. You might need
to employ a cleaner to ensure that the property is maintained to a reasonable
level of cleanliness. Some student accommodation landlords even go so far as
to employ a house manager who visits the property regularly and is on hand
to assist the students if they have any problems.
2. Damage to property
Damage deposits should also be secured as per any normal rental.
Considering that it is typically a parent who will sign the lease and pay for the
rental, or act as guarantor for the rental and any other costs, it is advisable to
also have house rules agreed to by the students, which are signed before the
lease is accepted.
3. Timing the academic year
December and January will normally result in vacancies based on the timing
of the student academic year. Where demand is strong and property in short
supply, it is not uncommon for landlords to insist that December and January
rentals are covered by the students in order to secure them the property.