Why Consider Student Housing as an Investment?

Investing in property has always been a solid option for those looking to increase their wealth and provide themselves with a passive form of income. In recent years, student housing has emerged as a greatly attractive prospect for investors looking to make the most of the current market conditions. This guide will look into why student housing is a great option for those looking to make their money grow.

What is Student Housing?

Student housing refers to unattached properties that are rented out to those who are studying at universities and similar institutions. This can range from single-bedroom apartments to shared studio flats, and investors can decide which option they are looking to provide for their tenants. Student housing also requires that the owners offer unique amenities that appeal to the demographic they are accommodating.

Reasons to Invest in Student Housing?

Demographics

The student demographic is an attractive one for investors, as they are generally in need of accommodation to allow them to pursue their studies and thrive in their chosen area. This constant demand for accommodation, and for the unique amenities that student housing offers, allows for investors to capitalize on a constantly replenishing market.

High Yields

Due to the constant demand for student housing, rent yields tend to be very attractive and can offer the investor a solid return for their investment. This can be supported by regular rent payments for a longer period of time due to the nature of the tenant’s studies.

Location

When looking into student housing, it is important to invest in an area that is known to have a large demand from both students and investors alike. Areas such as London and Manchester, which are universities hotspots, will be an efficient way to maximize profits and will also provide a good level of tenancy stability.

The Benefit of Maintenance Company

One of the benefits of investing in student housing is that investors can employ the services of a reputable maintenance company that can take care of a range of aspects of the property. This can include organizing repairs, cleaning and upkeep of the premises, and ensuring that the investment is in the best condition possible.

Reasons to Avoid Student Housing

Rental Guarantees?

When it comes to student housing, there is no guarantee of a tenant as there are so many variations of laws, tenancy, and accommodation options available. This means that an investor needs to ensure that the property caters both to potential tenants and the law, to make sure that they receive the best return for their investment.

Legal Responsibilities

When looking into student housing, it is important for investors to be aware of the legal responsibilities of area-specific rules and regulations of renting out properties. These include minimum safety requirements, tenancy agreements, and rules and regulations that will be applicable in the area.

Quality

Ensuring that the quality of the student housing is up to standard is essential in order to attract tenants. This can include utilizing the services of a maintenance company that can organize repairs, cleaning and upkeep of the property when needed.

Pros and Cons of Investing in Student Housing

Pros

• • Potential for high yields.

• • Can attract the right demographic.

• • Unique amenities.
  • Ability to appoint a maintenance company.

• • Efficiency of long-term lettings.

• • Ideal location may lead to good ROI.

Cons

• • No guarantee of a tenant.

• • Responsibility of legal aspects.

• • Need to maintain the quality of the property.

• • No short-term tenancy possible.

• • Deposits may need to be greater than regular property.

• • Limited tenancy periods.

Conclusion: Why Consider Student Housing as an Investment?

The investment into student housing has become increasingly popular in recent years, and for a good reason. The potential rental yields and reliable tenants, as well as the unique amenities available, make it an attractive prospect, with the added bonuses of minimum short-term rental periods and the ability to employ the services of a maintenance company. It is important for investors to understand the legal and rental aspects of the investment that they are considering, but with the right knowledge and planning, student housing can be a great option for those looking to make the most of their money. Explore the impact of Investment and Growth for UK Landlords in the rental business.

“What are the risks associated with investing in student housing?”

1. High Turnover: One of the main risks associated with investing in student housing is high tenant turnover. Many students change universities and willingly relocate elsewhere for a variety of reasons, leaving you with vacancies in your property.

2. Declining Enrollment: Investing in student housing is inherently dependent upon a stable and growing pool of students. Unfortunately, enrollment at universities can decrease with no warning, leaving you in a precarious position if you are unable to fill your houses with tenants.

3. Lack of Legal Protection: The law governing tenant-landlord relationships applies differently to student housing than it does to non-student housing. If you’re investing in student housing, you need to be aware of the legal implications and restrictions.

4. Maintenance: Wear and tear from students who are living in your property can be significant, and the cost of keeping the property in good condition can be high. In addition, legal and insurance requirements related to student housing can be complex and expensive to manage.

5. Market Fluctuations: Student housing markets fluctuate with the economy and can be affected by the availability of financing for student loans and grants. If it becomes more difficult for students to pay for housing and education, you may find yourself with little or no rental income.

What are the benefits to investing in student housing?

1. Financially attractive returns: Student housing is relatively recession-proof due to robust demand from student, and so it is able to generate higher returns than other types of investments.

2. Low Entry Costs: Generally, student housing offers lower entry costs than other types of commercial real estate investments.

3. Long-term Rental Contracts: Most student housing leases are for periods of up to a year and typically include facilities such as internet, cleaning, and recreational amenities.

4. Below-market Maintenance Costs: Student housing often requires lower maintenance costs due to limited use of common areas and the fact that many students are in school for a relatively short period of time.

5. Industry Growth: The global student housing market is projected to more than double in size over the next decade, making it an attractive sector for investors seeking long-term growth.

What is the difference between investing in student housing and investing in residential housing?

Student housing investments typically involve renting out units to students for short-term leases, like a one-year term (e.g., university students who require housing only for the duration of a school year). These investments require targeting specific markets and tend to involve smaller properties than residential housing investments. Residential housing investments, on the other hand, usually involve purchasing single-family homes, multi-family homes or condominiums that are leased out for longer terms (e.g., 1-3 years). These properties are typically larger, and often require more maintenance than student housing investments. There is a lot more competition in the residential housing market, though it may offer the potential for higher returns.