views on university accomodation

[ddan]

Hi...Just wanted to get thoughts on investments which are purley for university accomodation.

I have seen a few suburbs which have universities, they have flats for sale where each room has an ensuite and theres communal areas for students. Only students can rent these. There are high management & strata fees.

After all costs it could make around $400pw, which is an awesome yield, but just wondering what are the downsides? The place probably wouldnt see much cap growth, but if its making you 20K per year surely thats a good investment?? Ok even at half tennancy it would make you 10K p.a still good yield.

There must be a catch here that I cant see, just wondering if anyone out there knows them? or has experienced them?

 

[Shahin_Afarin]

Awesome strategy - I am personally looking for similar stock. Im looking at stock whereby I can buy a dwelling and turn it into student accommodation with further scope to add a GF.

 

[Ace in the Hole]

What are the rough figures on these to enable +$400/week after all costs?

 

[one world]

I once owned several houses near a University. I found that student tenants were always a lot better than the usual bogan tenants I have had to deal with over the years.

In my case I rented out rooms to individuals. Didn't bother going to Council for a special permit. Custom building a boarding house exclusively for students sounds expensive when you consider that most students go home to their families for around 3 months a year.

 

[moyjos]

http://www.realestate.com.au/property-unit-qld-sippy+downs-111495087

These are our local uni apartments ... They have seen reasonable CG and at first glance seem pretty good. I have not done a full DD on them, but believe the body corp and management fees are pretty high. When I first looked at these a few years ago, the catch was the lease was not the whole year (students went home for the summer) but i beleive they are a 50 week lease now. You are (were) required to renovate at the end of each lease. Sometimes just "patch and paint" sometimes more. Kitchen ware (crockery, cutlery pots and pans ) was changed every couple of years.

 

[The Y-man]

Hi...Just wanted to get thoughts on investments which are purley for university accomodation.

I have seen a few suburbs which have universities, they have flats for sale where each room has an ensuite and theres communal areas for students. Only students can rent these. There are high management & strata fees.

After all costs it could make around $400pw, which is an awesome yield, but just wondering what are the downsides? The place probably wouldnt see much cap growth, but if its making you 20K per year surely thats a good investment?? Ok even at half tennancy it would make you 10K p.a still good yield.

There must be a catch here that I cant see, just wondering if anyone out there knows them? or has experienced them?

Find out how much you can borrow on them - they may be treated like commercial props so you may only get 60%-70% loans.

If you see lots of them for sale, it could mean you'll have some trouble off loading them in future.

If the management company goes under, you may be left with a property worth a lot less than you paid for.

Having said all that, there are people on this forum who have had good results from these.

The Y-man

 

[ddan]

Ok so I spoke to the agent and got some real figures, doesnt quite stack up any more I should have checked it out before coming on here...sorry rookie error anyway heres the dets for those interested

Price 200K
4bd 4bth 1car
there seem to be atleast 5 of these on the market atm on the same street, make me wonder why???
figures are:
body corp $3700pa
rates $4300pa
mgmt 9.35%
$170pw per room with $50pwpr taken out for cleaning, power, ph, internet
complex has 25m lap ppol, games room, t.court, gym, sauna & on site mgmt

 

[Ace in the Hole]

Looks like your $400/week just went down to zero at best.
High risk for no reward is no deal.

 

[Rolf Latham]

Hi DD

I applaud you for the courage to ask the questions, rather than act in chicken faith

ta
rolf

 

[alexlee]

Rent 480pw = 24,960, net of mgt fee = 22,626.

Less body corp 3,700, rates 4,300 = 14,626.

That's 7.3% gross yield.

That assumes no vacancies and doesn't include repairs (but doesn't include depreciation either).

You said only students can rent them, so presumably these are actually exclusively for students and not just a house configured as student accom.

Those shiny facilities? Screams future special levies.

You'd get better returns buying Telstra shares.

 

[b simpson]

I reckon there would be money to be made offering furnished room rentals for fifo in Perth or maybe Brisbane. Some people advertise on the notice boards at my work. Would be even better if you targeted even time rosters so no vacant rooms. Just have some good lock up cupboards. Heaps of single guys doing fifo are not real fussy.

I stayed in a privately managed self contained apartment for 2 weeks in Fremantle. It was rarely vacant.

 

[jerrybee]

The best way to gauge whether this is a good idea is to look at international student enrolment numbers.

Look at the big companies, like Navitas (NVT stock code). They've been hit in recent years due to dwindling numbers (high AUD, tightening rules). I would start there with your analysis.