Student accommodation

[Red Star]

Hi there,

does anyone on here rent to mainly students? I have seen a property in the vacinity of UQ which is advertised as 8 bedrooms (4 beds plus a bathroom, kitchen and living area on each of 2 floors). It is rented fully furnished and the rent is increased each year. Each room currently rents for about $130 per week and is soon to go up to $137.

Apart from the obvious problem of having 8 separate tenents so it means the management fees will be that much higher, can anyone point out if there are any other problems to consider. I wondered if it would mean the property did not have such a high capital growth, or is that not true?

THanks a lot, in advance,

Shona

 

[yo yo ma]

It will usually only rent for 40 weeks a year... during holidays it may be vacant. From what I have seen, they have very poor capital growth. Check if you have to pay for extras such as phone bills; I have seen this in some student accommodation.

 

[marg4000]

There has been a lot of adverse publicity in Brisbane recently about student accommodation.

Under the Brisbane town plan, there is a limit of 6 unrelated people who can live in a house before it is considered a boarding house and has to meet strict fire regulations etc.

You would have to register the house as a boarding house if you want to rent out 8 rooms. Check with the Brisbane City Council as to what regulations will apply.

University semesters run from the beginning of March to the end of October, so you will have to allow for several months vacant each year. You will have to furnish the common areas, provide full kitchen equipment and also pay for cleaning of common areas (otherwise no-one will do it) and also yard maintenance (likewise).
Marg

 

[softmonkey]

possible loophole there - what does "related" mean? you could easily rent 2 rooms to a couple - queen bed & tv in one room, 2 study desks in the other.

 

[Perp]

Under the Brisbane town plan, there is a limit of 6 unrelated people who can live in a house before it is considered a boarding house and has to meet strict fire regulations etc.

You would have to register the house as a boarding house if you want to rent out 8 rooms. Check with the Brisbane City Council as to what regulations will apply.

This is a common misconception; there is an exemption to the requirement to be an accredited residential services provider if you're providing accommodation solely for students. There are fire regulations but not as strict as for boarding houses. I can provide contact details of a specialist consultant who deals exclusively with multi-tenancy accommodation regulations (boarding houses and student accommodations). What he doesn't know about this, isn't worth knowing. My neighbours complained to Council, and as soon as I mentioned my consultant's name, they said "no worries, if you have him on board, I'm sure everything's being done correctly". Council have inspected my non-registered 16 room property several times and have no problems.

University semesters run from the beginning of March to the end of October, so you will have to allow for several months vacant each year.

It will usually only rent for 40 weeks a year... during holidays it may be vacant.

Another common misconception! Demand is such that you can require tenants to sign a lease expiring during the busy letting periods. My students' leases are of varying length, but must finish in either late Jan/early Feb or late Jun/early July. The specialist property managers that I use, Queensland Property Investment Solutions, manage many properties of this kind and achieve > 95% occupancy.

I wondered if it would mean the property did not have such a high capital growth, or is that not true?

That may be true, but by gee it's cheap land-banking in St Lucia! It should be so cashflow positive that who cares if its appreciation is a bit slower? I should think that a future buyer would be buying it for cashflow or to demolish the property for the land; it's not going to appreciate like a house. It's really more like a small commercial property, valued by its yield and land component.

 

[Twitch]

Redstar, don't confuse buying student accom units, and buying an established house sitting on it's own block of land that has been rented by the room to students.

Comments like "I wondered if it would mean the property did not have such a high capital growth" apply to the former, not really to the latter.

 

[aaarghhh]

I can provide contact details of a specialist consultant who deals exclusively with multi-tenancy accommodation regulations (boarding houses and student accommodations). What he doesn't know about this, isn't worth knowing.

Hello OP

Is that Chris Odgers in Strathpine?

Aaron

 

[sjp]

Hi Tracey, as always your responses are factual and informative and always a pleasure to read. Can you please explain the term "landbanking". thanks simon

 

[Perp]

Aw, shucks, thanks sjp and welcome to the forum. You must have been lurking!

"Land banking" means buying a property where you primarily care about the future value of the land. It usually refers to buying large tracts of rural land (currently cheap) on the edge of a city, with a plan to hold it for many years - decades even - knowing that eventually it can be subdivided and will be worth very much more.

In this context, what I meant is that the land alone is worth quite a lot in St Lucia, so even if you only use the student accommodation to pay your holding costs while you wait for the value of the land to go up, then the building will have served its purpose, can be demolished, and you'll make a profit from selling the land for redevelopment. In that case, it doesn't really matter what building is on it at the moment, and if it's a building that won't experience a lot of growth.