Newspaper article The Northern Star (Lismore, Australia)

Take Advantage of Student Influx; Investors Have Plenty to Gain by Tapping into the Growing Rental Accommodation Sector in Our University Towns, but It's Important to Do Your Homework First before Taking That Final Step

Newspaper article The Northern Star (Lismore, Australia)

Take Advantage of Student Influx; Investors Have Plenty to Gain by Tapping into the Growing Rental Accommodation Sector in Our University Towns, but It's Important to Do Your Homework First before Taking That Final Step

Article excerpt

AUSTRALIA is one of the hottest education destinations in the world - in fact, we are ranked third with one in five of our tertiary students coming from overseas, according to the Bureau of Statistics. This, coupled with an overall increase in the number of places being offered by universities, is resulting in greater demand for student rental accommodation in Australia's university towns.

So what does this mean for investors?

There are essentially two types of student accommodation in the residential property market:

designated student accommodation apartment blocks purposely built and used for student accommodation (some blocks allow owner-occupation by non-students); and

normal investment properties located in university precincts, which are often rented to students on a room-by-room basis.

Investing in student accommodation is basically a yield play for investors.

With student blocks, you'll get a great yield and there is usually on-site management to handle the day-to-day chores - thus reducing the workload for you.

With normal residential investment properties located in university precincts, you'll pay a regular market price to purchase them but you can then enhance your yield significantly by renting room-by-room and fully furnished.

There are unique pros and cons to investing in student accommodation so I asked Michael Conolly, head of McGrath Network Property Management, for his thoughts and we put together a list for potential investors to consider.

Pros to investing in student accommodation:

ability to achieve a high yield;

strong demand as universities expand the number of places on offer and interest from overseas grows;

many students are subsidised by their parents, with some able to pay six months in advance, therefore reducing the arrears risk;

many universities run programs to help students find accommodation.

Cons to investing in student accommodation:

in student accommodation blocks, the on-site management fees can be expensive and will eat into your returns. …

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