I have found a property close to griffith uni in brisbane. 5 bedroom brick home, 2 bathroom, double car garage, block is approx 807m2.
currently there are 4 students renting the place for $90/week each (ave rent in this area is usually $250/wk). There is capacity for one more student. The owners are keen to sell given that property prices have risen in the area. They want $400K for the property. I think it is a little overvlaued for the area (about $360K-$380K would be more reasonabe). However, given the rental return this sounds like it could be a good deal, even at $400K.
I’m a little worried about renting to uni students (mainly cos I know what I was like at that age). If anyone has a similar arrangement renting to students, I would be keen to hear how it is going or if there have been any problems.
cheers,
interface.I am doing it. I have five students and they are wonderful young people. The place is always spotless.
I was selective and chose my ones well.
If you have any specific questions please post them or email me.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Interface,
I don’t know the area, but one of the factors in determining value is rental return. Whilst larger homes generally have lower yields, if the average rent for the property is $250, then even at $360k to $380, that is a very low yield.Look at comparable sales before putting in an offer.
James
I never rent to uni student myself. But when I was in uni and share with my mate I alway keep the place very tidy. So it is depend on individual and group. If one group who don’t like tidy up place then there is a problem. Like morgage hunter said if you select the student yourself then I think it will help. one down turn in renting to uni student is they come and go very often….
Warm Regards
ChanDollars
[Keep going, you’re on your way to financial freedom]some students are good some are bad.
I’d budget for ripping up the carpet eventually.
I’d also screw the vendor down 20%, and not move up past 13% discount. In a softening market, it is a psychological wake up call to make an offer 20% lower than the list price. The market is softening right across Brisbane in my experience….I have seen drops in Wynnum Manly, Sandgate, Aspley, Banyo, New Farm in the last 6 weeks.
If the students leave, the greater rental market will give you a much lower yield.
Take into consideration that there are a lot of forces acting now to weaken the market further.
– Investors are waking up to low yields and are holding back buying low yield properties.
– The supply of investors is not infinite. Many have already bought into the market, therefore there are less around to buy.
– More properties are coming onto the market.
– The RBA may raise rates in Mar/Apr, especially to curtail household debt.
– Household debt is dangerously high. Many home owners cannot afford to take on more debt, and will have trouble clearing current debt. This will inevitably slow artificially maintained domestic growth. This is the strongest factor that will keep property prices down in the coming 5 years.Bruce
Mooloolaba, QldI agree with Bruce, dont count on the higher yield from uni students. If renting to them becomes too arduous and you opt for a “normal” renter your yield will drop to the average for the area (250/w). Based on this yield I would be working out what the highest I would pay would be, say $250K to generate a 5% return when getting 250/w rent. You may feel it is worth the extra headaches having students renting and therefore pay more but I would not. I have rented to students before and as has been said, there are good ones and bad ones. One thing you can count on is that they are always changing as they graduate and move on. I would say that unless you can get the property for less than $300K, forget it. At the high asking price, your chances of CG are also not too good in the short to medium term.
You also have to remember that Uni holidays last for about 3 months (Dec->March), so you will have to factor that in. Also perhaps reduce the rent a small amount and take a larger deposit to cover any damage.
Also why not buy another property around the area for $250K+ and do the same as the other people are currently doing. Also you can add great services (cable TV, Cable/DSL internet, etc whiuch can boost the rental return).
Rgds.
Lucifer_auThis doesn’t have to be hard if you arrange it right.
Agents can manage it for you. Problem is they just advertise in the paper or on the uni website and will take nearly anyone that applies as they just want to fill all their places during the peak demand in Feb.
I advertised within the medical student community (I can show people how to do this). I have five very fine young men and women who are very serious about their study and the study environment. They were actually attracted by the fact I was limiting it to medical students only.
I am putting broadband on as well as having nice furniture, still cheap but clean and in good repair.
I also provided a DVD player – cost me $150 but their perceived value is much higher.
Of the five students three have the rent being paid by Daddy direct to my account. The other two pay a month in advance.
Whilst there are major breaks over summer I have offered to allow them to keep the room and leave their possessions there for half rental. Alternatively they can move out and I can rent the rooms to the summer school students for similar money.
All of my students have expressed an interest in maintaining a room over the break at half price. We will see how that works in Nov.
What else can I add? I keep the garden tidy and this gives me the chance to keep tabs on it. I have a vege patch going and drop whatever is ready in on the kitchen bench and get a drink of water and it works well. Because they are only leasing their room I have free access to the common areas – they are happy with this.
Any questions?
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by MortgageHunter:This doesn’t have to be hard if you arrange it right.
Agents can manage it for you. Problem is they just advertise in the paper or on the uni website and will take nearly anyone that applies as they just want to fill all their places during the peak demand in Feb.
I advertised within the medical student community (I can show people how to do this). I have five very fine young men and women who are very serious about their study and the study environment. They were actually attracted by the fact I was limiting it to medical students only.
I am putting broadband on as well as having nice furniture, still cheap but clean and in good repair.
I also provided a DVD player – cost me $150 but their perceived value is much higher.
Of the five students three have the rent being paid by Daddy direct to my account. The other two pay a month in advance.
Whilst there are major breaks over summer I have offered to allow them to keep the room and leave their possessions there for half rental. Alternatively they can move out and I can rent the rooms to the summer school students for similar money.
All of my students have expressed an interest in maintaining a room over the break at half price. We will see how that works in Nov.
What else can I add? I keep the garden tidy and this gives me the chance to keep tabs on it. I have a vege patch going and drop whatever is ready in on the kitchen bench and get a drink of water and it works well. Because they are only leasing their room I have free access to the common areas – they are happy with this.
Any questions?
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
That’s a very smart way, thanks for sharing.
Warm Regards
ChanDollars
[Keep going, you’re on your way to Frolic Freedom!]Thanks everyone. MortgageHunter, I like your suggestions about selection of students and your strategies to keep them happy and monitor the property.
Bruce & HousesOnly,
Thanks for your advice on the market price of the propoerty. You both make very good points about the softening market and the potential risk in relying too heavily on the student market.
Thanks everyone, I will take all the feedback on board and do some more thinking on this one. I’ll talk to the vendor and attempt to negotiate the price and see what happens from there.
Thanks interface.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
