Student Accomodation vs Studio Apartment

Hi All,

I am Chen from Singapore and i would like to buy an apartment unit for my son's education. He plans to study in Swinburne Uni at Hawthorn, Melbourne. As i am very new in real estate in Australia, i would really appreciate your opinions on the type of property to be purchased.

From realestate.com.au, i can see some student accomodation is listed for investment only and some do not.

Student investment accommodation
http://www.realestate.com.au/property-apartment-vic-hawthorn-106346162?tm=1270780833&c=69936918

Studio Apartment
http://www.realestate.com.au/property-apartment-vic-hawthorn-105934779?tm=1270780833&c=69936918

Is there any restrictions on investment property for student? i.e legally restricted for students only and not for other residentail purposes....As such, the potential of capital gain is limited and the target tenant is also limited to student only?

Appreciate your feedback. Thanks.
 
Hi Chen

Im not from Melb but will give you my general thoughts.

There are *usually* no restrictions on what is an investment properties for students. However you may find a block of units/flats/studios that are ideal for students because it is very close to the university or some other educational institution. Therefore if you were to rent something like that out - you would most likely get a student tenant and that is most likely what your target would be. Its not to say a non-student cant live there. It is common to see a building of apartments/rooms that are 99% rented by students sometimes.

After you buy a property, you can generally choose what you want to do with it (i.e. use it for your son or rent it out as investment). HOWEVER if you purchase a property where a tenant already has a lease, then you wouldnt be able to move in right away (generally speaking). This seems to be the case in the first property you've listed. A lease exists until February 2011 which is why the seller is targeting investors. If you purchase this, the tenant would still be there until lease expires (or until one of you breaks contract)

Just my thoughts.
 
Hi Chen,

I'm very familiar with the student accom in that area.

Queens ave is a small st in amongst commercial buildings, Park ave is the nicer street. I noticed the Park ave one only had 2 burners on the stove top. Not sure how much cooking your son would do, but he may like more burners. Transport's really great round there for train & tram.

One of the ads said something about 'investors only'. That worries me. There may be a clause somewhere that says you can only rent it to a student.

It's very cheap so I imagine it'd be quite small too. I'm of the belief they have little capital gain potential & you may be less able to sell one on because the pool of people looking at that sort of accom is more limited than for (eg) 1BR's & 2 BR's.

Depending on what you'd like to spend, I'd probably consider purchasing a 1Br, a 2BR or even a house in the area. There are some students that share houses or flats there & they're much nicer than the student accom or studios. Much better capital gains & easier to sell, just make sure you get one with a car space on the title.

Best of luck Chen!
 
There're restrictions on purposed built student accomodation particularly in the planning permit by the council where it restricts the occupant to be students only, even if you're owner occupying.

In this case, if it's your son, no problem!

Capital gains are low & slow, yield is better and lower Owner's Corp fees as the building has less facilities to maintain in common areas, etc.

Depends on your purposes, generally better to buy studio and only buy student accomodation as last resort (personally I wouldn't unless it's a bargain!)
 
GTI

Are your reasons for buying it for investment or just to house your son while he attends UNI, what is your thinking once he finish UNI. There is little growth in fact for student accom around Swinburne, a number of people have sold at a loss as the B/C and sinking funds are quite high. When it comes time to sell, banks in Aust know they are only sold to investors so will not lend to the same degree as they would most other properties. If you do decide to do it go with a place that is not student only accomodation.
Jezza
 
why not buy a cheaper 2 bedroom unit and let your son rent out the other room. maybe get $150 to$200 per week im thinking for a room or buy 3 or 4 bedroom house or unit and rent extra rooms ...you do the maths..include electricity and water in the bills plus furnish each room,bed cupboard table etc....
 
If you are looking to sell the property after your son finishes university, i'd go with a studio/1 bedder over a student apartment. It is quite difficult to obtain finance to buy a student apartment so the demand to purchase the unit from you would be very low.

i would also check whether your son is able to move into the student apartment if you buy it. Some apartment blocks are run by the university with the students selected by the university, so under the agreement between you and the student accommodation body, they select the tenant and you have no say in who lives there.
 
Hi Chen,

I'm very familiar with the student accom in that area.

Queens ave is a small st in amongst commercial buildings, Park ave is the nicer street. I noticed the Park ave one only had 2 burners on the stove top. Not sure how much cooking your son would do, but he may like more burners. Transport's really great round there for train & tram.

One of the ads said something about 'investors only'. That worries me. There may be a clause somewhere that says you can only rent it to a student.

It's very cheap so I imagine it'd be quite small too. I'm of the belief they have little capital gain potential & you may be less able to sell one on because the pool of people looking at that sort of accom is more limited than for (eg) 1BR's & 2 BR's.

Depending on what you'd like to spend, I'd probably consider purchasing a 1Br, a 2BR or even a house in the area. There are some students that share houses or flats there & they're much nicer than the student accom or studios. Much better capital gains & easier to sell, just make sure you get one with a car space on the title.

Best of luck Chen!

Hi Mary&Mat,

Really appreciate your comments! In summary, don't go for student and studio apartments but 1br onwards....i will consider this.
 
There're restrictions on purposed built student accomodation particularly in the planning permit by the council where it restricts the occupant to be students only, even if you're owner occupying.

In this case, if it's your son, no problem!

Capital gains are low & slow, yield is better and lower Owner's Corp fees as the building has less facilities to maintain in common areas, etc.

Depends on your purposes, generally better to buy studio and only buy student accomodation as last resort (personally I wouldn't unless it's a bargain!)

Hi badcliq,

This is what i am worried of...a purpose built student accom doesn't do good after my son graduated...really hard to dispose it off with the limited potential buyers...
 
GTI

Are your reasons for buying it for investment or just to house your son while he attends UNI, what is your thinking once he finish UNI. There is little growth in fact for student accom around Swinburne, a number of people have sold at a loss as the B/C and sinking funds are quite high. When it comes time to sell, banks in Aust know they are only sold to investors so will not lend to the same degree as they would most other properties. If you do decide to do it go with a place that is not student only accomodation.
Jezza

Hi Jezza,

Thanks for your advice! I will not buy a student accomm by looking at your comments...
 
All,

Heartfelt appreciations for your sincere comments...i will consider buying at least a 1 BR for better capital gains and convenience when i wanna sell it later...:D
 
Hi Deltaberry,

Your comment is odd against all forumer's.

Can you give more details why it's great to buy student accoms?

Well it's just a low-risk proposition yea? It's cheap to buy, cheap to rent so makes it easier to rent out.

If you go buy a $10m property, how hard is it to rent that out? In contrast, for student apartments, you can rent them out easily.

Also high yield yea? That compensates slower capital growth
 
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