Simon Says: Consider student accommodation

Record low interest rates and booming population growth in Brisbane is fantastic news for real estate investors, and we have keen demand for new apartments and off the plan home sales.

But there is another type of property investment that flies under the radar and it is a fantastic opportunity whether the market is growing, resting or teetering.

Student accommodation!
collage students

Let’s do some sums.

There are around 63 000 international students enrolling in Brisbane universities, schools, colleges and TAFEs every year, according to the Brisbane City Council Youth Strategy 2014-2019 report.

That’s almost the population of Rockhampton and there are more overseas students in Brisbane than there are people living in Gladstone.

We have a town of international students living in our city and they all have to live somewhere.

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And it is only going to burgeon further with areas around universities developing in line with the expansion of the educational facilities.

That makes it a fantastic, positive cash flow investment with a captive high yielding market.

On average students will pay between $160-$350 dollars per week per room, depending on location, what the room has to offer, what extra conveniences are provided, eg a private ensuite and what the standard of common areas are.

Student accommodation properties return a greater income than an average residential investment, because tenants rent on a per room basis, which means in total it’s a greater rent return than you would otherwise achieve on a single dwelling leasing.

Well what about when universities and colleges go on break, especially the long summer hiatus?

You may think these rooms lie vacant while school is out, but in most cases either overseas students stay in Brisbane and continue to study over the summer break or local students, who don’t want to miss out on proximity to their college, take on the lease earlier than the commencement of term.

In some instances student tenants sign a rental agreement on the 1st January with the lease expiring 31 December, which means little to no vacancy year-on-year.

In fact that’s what I have found to be the case, and have put my money where my mouth is.

I have invested in student accommodation in Kelvin Grove and St Lucia, near Griffith University and The University of Queensland respectively and they have both provided great return and growth.

And it’s only going to get stronger with Brisbane branded Australia’s New World City.

According to the Queensland International Institute, Brisbane and indeed other centres in Queensland with higher educational facilities, is attractive to overseas students because it is more affordable to live here than many other Australian cities (see rent ranges mentioned above) but has just as many well regarded, world class educational institutions.

It is a city with an affordable cost of living, reliable transport and infrastructure and not too expansive to be overwhelming to new students, but the BCC Youth Strategy has also highlighted that overseas students often have difficulty accessing affordable housing.

And just as student rooms are hard to find so too are they as investments.

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They don’t come up very often and when they do they get snapped up pretty quickly.

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Currently in Kelvin Grove there are two student accommodation opportunities on the market (link) and they are already booked for the start of the 2016 year. (see links below)

http://wheelans.liveagent.com.au/2370398/

http://wheelans.liveagent.com.au/2370411/

But don’t take my word for it, like the students you are hoping to house, do your homework for the best results.

 

 

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