Investing In Student Accommodation – What You Need To Know

Investing In Student Accommodation
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Investing in student accommodation is one of the hot topics amongst property investors at the moment. The thriving student population combined with high yields has made it an attractive option for many.

But, before you rush in and start snapping up student properties, it’s worth doing your homework to decide whether investing in student accommodation is right for you.

Here’s our guide to what you need to know before you commit to becoming a student landlord.

Advantages Of Investing In Student Accommodation

  • High demand – many cities have a thriving student population who all need somewhere to live.
  • High yields – students generally need less space and are happy sharing properties with multiple people, maximising income even on smaller properties.
  • Prompt payments – it’s not always the case, but often parents will be the ones paying the rent, which usually means you’ll be paid on time!
  • Fewer complaints – students tend to be less demanding than older tenants and are more willing to accept any problems that occur.
  • Increasing demand – UK universities are seeking to increase their student population, this means more students needing accommodation.

Disadvantages Of Investing In Student Accommodation

  • Uncertain future – students tend to change their living arrangements more regularly and sometimes drop out of their course.
  • Vacant properties – it’s likely your property will be unoccupied for long stretches over summer and for holidays such as Christmas. This can mean a higher risk of break-ins or property damage and may leave you with months when you receive no rental income at all.
  • Maintenance costs – although students tend to complain less about issues, they are also more likely to cause damage to a property, leaving you with more repair bills and redecorating costs.
  • Disruption to neighbours – as students like to party, neighbours may complain about noise and disruption from your tenants. This can cause more than a few headaches for you!
  • Low capital growth – student accommodation doesn’t tend to rise in value like other buy-to-lets
  • Smaller resell market – the only people interested in investing in student accommodation are other investors, which reduces the pool of buyers.

Types of Student Properties To Invest In

students relaxing in a kitchen

If you decide to invest in student accommodation, there are a number of different types of student accommodation you can consider.

Purpose-Built Student Accommodation

These are the serviced apartment blocks that are springing up around Universities across the country. The advantage for landlords with purpose-built properties is that they are usually entirely managed by a service company.

That means it’s an entirely hands-off way to invest in student accommodation.

Some of them can be really quite impressive too. We saw inside some newly built ones in Nottingham, and it’s really surprising just how nice they are. Student accommodation has come a long way since we were at Uni!

Flats/Apartments

If you find a flat or apartment up for sale near to a student area, it could be a good choice for investment. They are often easy to manage, and you won’t have to worry about gardens overgrowing or anything like that.

I lived in a flat for my first year as a student and I didn’t miss not having any outside space. Sure, it would have been nice, but we were so often out and about (or sat in a beer garden!) that it didn’t bother those of us who lived there much.

It certainly made it better for our landlord and I know for sure we wouldn’t have appreciated or maintained a garden area very well!

Shared Houses/HMOs

A shared house or an HMO (house of multiple occupancy) is a popular choice of investment for student landlords. They are usually larger properties that have been converted into several separate bedrooms and a few shared areas.

The advantage of such properties is that they allow you to maximise your yield, spread your risk, and improve the ease of maintaining the property by having multiple tenants under one roof.

During my time as a student I saw a lot of people drop out of courses part-way through or join courses late. For people like this, shared houses are ideal and many of my friends used them.

They also help to lower your risk as a landlord as, if one person drops out of the course and leaves the tenancy, you’ll find it much easier to replace them than if you were renting out an entire house under a single tenancy.

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Where To Invest In Student Accommodation

Where To Invest In Student Properties

There are several factors that make a good student property. For this, you’ll need to put yourself in the position of a student to understand why they are so important!

Near To The University/College

It’s probably fairly obvious, but most students prefer to be near where they study. It makes it easier to get to lectures and reduces travel costs.

Generally, the nearer to the University or college, the better. So when investing in student accommodation, pay special attention to the location of the property in regard to university buildings.

This was certainly true when I was at University. I lived literally a 5-minute walk away, so I never had to worry about turning up to lectures late (though I still managed it!).

Close To Pubs & Clubs

This one is so important for most students that it probably even trumps the previous one! Most students enjoy socialising and so being close to several student-friendly bars and clubs is definitely a plus point. 

Ideally, the property will be close enough to the nightlife to avoid the need for costly taxis. However, it should also be far enough away to avoid the worst of the noise when exam time arrives.

I lived in pretty much the ideal location when I was at University as not only was I close to campus, the city centre with all its student shops and bars was literally 5–10 minutes away. I never had to spend a penny on a taxi and I really loved that location.

I was happy to pay a premium for such a location and also accept a slightly lesser standard of accommodation just so I could be in my preferred location.

Access to Good Public Transport Links

good transport links are vital for student accommodation

Students will often travel home at weekends and during holidays, therefore a property that’s close to some good transport links is often favourable.

When I was at Uni I used to get the train home every 2–3 weeks and so being a 10-15 minute walk from the train station was ideal for me and again factored into where I wanted to live.

Find out where the nearest bus and tram stops are, and check journey times and costs to the main bus and train stations.

Proximity To Shops & Takeaways

As many students won’t have their own transport, being near to shops and takeaways is generally desired.

I pretty much lived off takeaways when I was studying and there was a lovely pizza place just a few doors away, so I was in fast food heaven!

However, these days more students are into healthy lifestyles and home cooking, so it’s less of a draw. Although, it’s still very important to be near food places for many students.

Number Of Other Student Properties In The Area

Most towns and cities with universities have specific areas where most of the students live. Not only does this mean students are close to their friends, it also helps reduce issues of noise disturbing non-student neighbours.

In my first year at Uni, I lived in a house that was surrounded by normal residential properties. It didn’t go down well.

We often had friends round or parties at unsociable hours (I realise now I should have been more considerate!) and we received complaints (and even threats!) from neighbours regularly. Naturally, some of those complaints went to the landlord and so it’s not worth the hassle.

So when investing in student accommodation, try to pick properties that are surrounded by other student properties. This will help ensure your property is occupied throughout the academic year without causing problems for the surrounding residents.

What Makes A Good Student House?

If you have decided to buy a house to rent out to students, rather than buying a flat or purpose-built accommodation, there are a number of things to consider that can make or break a property for students.

Easy-To-Maintain Outside Space

Students often like to have some outside space for BBQs, smoking, or even just to enjoy the sun; however, they don’t usually want to have to spend time maintaining it.

Avoid grass when possible as it will likely become overgrown and neglected. Instead, stick to paving or decking, so students can enjoy the space with only the occasional sweeping up needed.

My first student house had a small courtyard garden that was entirely paved. As busy students, we liked it as it meant we always had somewhere we could sit out, without having to worry about cutting the grass or getting rid of any weeds.

Relatively Small Bedrooms

Bedroom with a bed in

Unlike a typical tenant, students are often quite happy with relatively small bedrooms. It’s less for them to try and keep clean and tidy and, providing there are some good communal areas, they are unlikely to spend much time in their bedroom.

I pretty much only used my bedroom for sleeping and studying during my student days. As long as I could fit a bed, wardrobe and desk in, I was happy.

Good Communal Areas

Tied into the previous point, in shared student houses, good communal areas are a must. They don’t need to be huge as the ease of keeping it clean and tidy is still an issue, however, it has to be large enough to allow the tenants and their friends to gather.

As the areas are likely to be used for parties and gatherings, hard flooring is preferred over carpets to help avoid damage from spilt drinks.

Just keep in mind that in the case of flats or apartments, hard floors can be quite noisy for anyone living below!

Working Spaces

Best Student House

Contrary to what many people think, students don’t spend their entire time partying. They work just as hard as they play and will have deadlines to meet on their coursework and exams to revise for.

Therefore, make sure there are good working spaces available in the property. Ideally, there should at least be a small desk in each bedroom. This allows students to work in private when the communal areas are busy.

I always found having a desk in my bedroom was a huge help. My housemates weren’t on the same course and schedule as me, so often when I had deadlines or exams looming, they didn’t (and vice versa).

So, being able to lock myself away in my room to work helped me keep on top of my work, and it was definitely something I valued in accommodation.

Fast Internet Connection

When investing in student accommodation there is one big must when it comes to facilities: fast internet. With plenty of coursework to do, friends and family to keep in touch with, and the latest box sets to watch on Netflix, a fast, reliable internet connection is a must for most students.

Make sure you choose a property that is able to be hooked up to fibre broadband and look at providing a good router with Wi-Fi available in all rooms in the house.

You may also want to check 3G and 4G phone reception too to ensure students aren’t cut off from the online world if their internet connection goes down.

Secure Bike Storage

Depending on how close the property is to where the students study, you may find they like to cycle to where they need to go.

Cycling is cheaper than public transport and is also great for more fitness-conscious students. You can help encourage this cheaper, healthier lifestyle by providing secure storage for bikes. Bonus points if you can also put it undercover to keep them dry too!

In the flat I lived in during my first year I used my bike to get everywhere! From getting to my next lecture to visiting my parents on the other side of the city, my bike was my main mode of transport.

Unfortunately, the only place I could keep it was in the entrance hall to the flats, which was both inconvenient and not the most secure. I would have really appreciated a landlord who had taken the time to provide good, secure bike storage.

Parking

parking becomes more important for student accommodation

Cars are no longer a luxury. As such, many students now own their own car, so they can get where they need to be quickly and easily. Therefore, properties with some form of parking available are often sought by students with their own car.

Investing In Student Accommodation – A Summary

As you can see, there are some great reasons to invest in student property, and a fair few things to watch out for too. They can be a great investment when done correctly, so make sure you approach it right.

If you’ve never been a student, it’s important to try and get into the mind of one to understand what’s important to them. They tend to have quite a different wishlist to most adults.

Of course, if like me, you have been a student, you’re probably all too familiar with the student lifestyle and the kind of things that were important to you.

You should also be aware that we reported recently on how students are looking to take back control of the property market using student house co-operatives. These have been born out of the perception that landlords of student properties are only in it for the money.

Therefore, if you do decide to invest in student accommodation, make sure you treat the students as you would want to be treated yourself in order to build up a long-term viable business.

Author

  • Paul James

    Paul James, is a marketing expert with a passion for property. As well as being a property investor, Paul has also worked within the marketing departments of some of the UK’s leading estate agents. Paul is the founder of Property Road.

    View all posts
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