My partner and myself are looking at student accomodation as our next IP.They are 4 bedroom apartments.
Does anyone alse have these as IP’s – I was hoping for some feedback (good and bad)on how others have found them.
There is on site management(9%mgt fee) , 500m from the university,local woolworths,shops etc , good facilities for students – each apartment is fully furnished & each bedroom has it’s own ensuite,queen bed,bedside,built in robes,study desk, internet access and telephone.Electricty is included in the cost for students (who would pay that ? It did not mention anything about the owner picking up the tab) The apartments range from 4 mth’s old to oldest 2 years.The common grounds include 2 pools, sand volleyball court, tennis and basketball courts. I’d imagine that they would be quite a attractive option for students (but could they be the source of additional costs in time to come for the owners of the apartments???) – only worry is the location and I don’t know that there would be much in the way of casual work oportunities for the students living in that area and whether this would be an issue involved in keeping the apartments occupied.
The vendors are quoting 92% occupancy rates at the current rental of $135 per student – do you think this is manageble amount for a student to pay not including their other expenses eg. food car (or bycycle !) etc ???
Figures are –
$222,500 purchase price
$25920 p.a. gross rent (92% occupancy)
$6836 (9%management fee / sinking fund /body corp fees/Body Corp Ins/ Rates / Landlord Ins)
Our annual Interest payments $15.839
Total tax deduction including above interest payments expenses,deprec bldgs and fittings, borrow costs would be approx 28,038 1st year.
They appear to be positively geared to me but maybe I am missing something – what are your thoughts…?MIKALA
One on-site accomodation area at a WA UNi charges $90 per bedroom, kitchen and lounge are shared facilities..everything is included in the price i believe(no a/c though)
I’m not a fan of managed apartments for a number of reasons, though..thats just me..
A lot of Uni’s are ‘loosing students’; Tafe are gaining students and there are many overseas uni’s opening up (India, China etc) Australia may loose some of their o/s market..I believe some uni’s are dropping a lot of non-core courses..Curtin Uni in WA was stated as doing this in the paper some months ago..
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorHi Redwing,
Thanks for your reply – vendor states that there are 5000 students currently with the uni gaining more students in the future – however that may just be the vendors estimate ??
I’ll check out the uni on the web and see if I can find out more that way.
By the way the apartments are a/c so maybe that would account for the higher rent.
What did you think of the figures – am I right in that it is positively geared (if fully tenanted)
– I have bought ID so will load this and see what the position is with occupancy rates etc…
Is anyone aware whether lenders will still lend up to 80% lvr on this type of investment…MIKALA
Hi MIKALA
We have student accomodation on the Gold Coastin a complex of 65 3bed with ensuite units power included Pay extra for broadband connection. complex has pool and gym included. The complex is managed and caters mainly for overseas students. They charge $140 pw. I think the idea is good the downfall is you are very reliant on the manager’s handling of the students and promoting the complex at present our lost 50 USA beds so the complex is only 70% ful and that hurts(‘[angry2]’)Peter
Hi MIKALA,
Sounds great. I had a 3br unit on the Gold Coast that I bought in 95. The sell speil was to accommodate uni students at Bond. It was fully furnished, crock and cullery stc. all except linnen.
I found that overseas uni students were not kind tennants, they paid very little care to most things, like slamming doors, drawers, lots of minor damage to walls , corners, insinkerator used as garbage disposal and metal spoon storage, poor cleaners, very messy people.
Overseas uni students were not stable in that they tended to: drop out, defer, parents can’t afford, problems at home, I have to break my lease and I have no money!!!!!!
These issues resulted in high turnover of occupants,and very very high maintenance costs.
After a few years I decided no more students.
I am not being raceist here, but if they were say kids from across town or from the country things may have been different.
I would request the vendor supply proof of occ rates, and I would contact the uni to determine demand and what they can afford to pay, then factor in heaps of maintance costs. I would also check out mamagement costs / fees when a student leaves ( could be 1 or 2 weeks rent).
Good luck hope this is of some assistance.
hrm
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