Student accommodation

Hi Nich4 I've looked into student accommodation like http://www.varsityapartments.com.au to do exactly what Richard described above, balance the negative cashflow from my growth properties, but what I found was that despite apparently very high rental yields (11% – 15%) most of this disappears into high management and maintenance costs. 

E.g. in Varsity you could get a unit for around $220,000 and it would rent out for $600 per week, but your costs will be high, something like the following (these numbers are 6 months old):

Regular Expenses
Management Fee            3.5% of gross rent
Letting Fee                     5.5% of gross rent 

Monthly Charges
Postage and Petties         $5.50
PABX                              $52.00
Internet                            $69.36
Austar                             $26.00
Common Room Clean       $34.65
Electricity per month         $60 – $80 

Advertising – 6 months       $45.00
Rates per year                  $2000 approx
Body Corp per year           $3900 approx  

Also, don’t forget during breaks most students will not let the unit but instead return home so you’ll be faced with no tenants during this time. However, in this particular complex they rent the units out as holiday accommodation and that seems to be working better each year.

One of my main concerns was that the cashflow is not that great due to the high costs and I believe you have very limited capital growth due to the restricted nature of the property and you can find comparative cashflow with better room for growth in other property types…