investing in university student accom

[Carrienbones]

HI. I'm relatively new to the game. made a few big mistakes with my first IP.
I'm looking for something that is positive cash flow, but I have limited funds. Found a few "student only" studio units across from a Melbourne University with good rental return vs the asking price. Anyone had any experience with this type of IP?
Doesn't look like much for capital growth, but atm I"m looking for some extra cash to pay down some debt so I can buy another IP?Thanks in advance

 

[Spades]

Hi Carrienbones,

Don't make a 2nd mistake on your next ip!

Do you have at least a 20% deposit for these boxes?

Have you looked at the fees involved?

If your after cashflow,my listing will be up tomorrow A 1 bed unit NOT a studio.

Cheers Spades.

 

[dboy_tomato]

With these student only accommodations are the same limitation would apply when you try to sell these 'studios' - ie limiting your potential opportunity to sell to the boarder market.

You may want to check with the bank as well as there maybe restriction on service based studios and if the studio is deemed too small (ie < 50sqm). Some of the big 4 banks don't lend if it is < 50sqm

 

[AlmostBob]

usually only the building owner makes a profit on those units

 

[imbi3]

HI. I'm relatively new to the game. made a few big mistakes with my first IP.

What were your mistakes?

 

[tobe]

finance is very dificult for properties;

that are small
that arent fully self contained (share a kitchen area or similar)
that restrict the occupant (can only be over 55 or only students etc)
that restrict the management (all are common managed by one provider who sets the terms)

Unfortunately most student accom ticks all of these boxes.

It can be dificult financing them AT ALL. The lenders that do finance them restrict the LVR to a much more conservative ratio, and they usually also restrict themselves to only a certain number of units in a particular development to limit their exposure.

Thats why the yield is so good, because no one can get finance on them.

Thats also why there isnt much capital growth, cause in the future people still struggle to finance them and therefore the likely pool of buyers, the demand, isnt great.

 

[Peter_Tersteeg]

Second what everyone else has mentioned.

This type of property is not easy to finance and usually significantly more expensive than regular residential properties. Ongoing holding costs are generally significantly higher too. You might see a lot of that cash flow disappear.

Also I'd consider this type of property to be a business, not an investment.

 

[Simon]

I'm thinking of selling my student place.

5 bedroom house returning just under $800 pw during the semester. Less over summer.

Just by Newcastle university. Has been a good deal but I'm looking at other things now.

Not sure what the demand is. Will get an agent through for an appraisal.

But I wouldn't touch a purpose built place. They have already factored the higher yield into the price.

 

[Tyla]

I would stay away from them as the rent tends to vary a lot seasonally, hard to get finance and cg prospect may be slim.