Sunday 29 March 2015

Investment property opportunities - student housing



Investment property opportunities - student housing


People have varying ideas about what makes a good investment property.  Some people like to buy in locations that seem to experience perpetual summers and are rented out as holiday accommodation all year round, while others like to purchase in up-and-coming trendy suburbs, so as to capture the ‘just leaving home’ market. 

When purchasing a residential property for investment purposes, you should definitely consider student accommodation as another viable option. 


Traditionally Australian students have stayed close to home to study and live at home while doing so.  However we are currently seeing university, private college and TAFE students travel around Australia as they seek out the best institutions at which to complete their course or conduct a work placement and as such require affordable housing away from home.   


The number of international students attending Australian universities is also increasing, with education services now Australia’s largest service export industry behind tourism, bringing in billions of dollars to the Australian economy.  While some of these foreign students may be lucky enough to live in housing purchased by their family, the majority require accommodation for the duration of their stay. 


In many locations around Australia therefore there is demand for student housing.  And you can be sure that as long as you keep your property properly maintained (as you would any investment property) your rent will keep coming in for as long as students attend the nearby institution. 


So what can you do to maximise the return from your property? The first piece of advice would be to remain selective – don’t assume that just because your occupants are students they are after a dingy dwelling in dire need of renovation.  Students are becoming increasingly picky, especially international students whose parents, in many cases, are funding their accommodation.   Try to buy a modern property, or if so inclined, fix up an older dwelling, installing contemporary amenities. 


Remember that location is essential when choosing a property.  You should try to buy in areas that have large student populations and are within close distance (preferably walking or easy public transport) to education institutions. 


To ensure that your property is always occupied, even during holiday breaks, try to stay proactive in its management, or employ a property manager who is.  Be aware of when extended breaks will occur and plan ahead if you know that your tenants will wish to vacate. 

Student accommodation can be an excellent investment property option, with (in many cases) a lower upfront purchase cost and very certain ongoing rental payments.  You may find it worthwhile to look into the option when considering your next investment move.

Should you buy a house or a Unit or Town House or Duplex?




It seems to be a very common question when it comes to buying real estate, particularly for first and second-time buyers – will it be better decision to purchase a house or a Unit?

As a starting point, the factors that go into making this decision are mostly personal preferences.  These include whether the property is an investment or to be your residence, the location that you’d like to live in, how many people will be living in the property, what types of maintenance you are prepared to carry out personally, and so on and so forth. 

Investment vs. Primary Residence

Many investors find Units to be easier purchases for a number of reasons.  Units do not necessarily require the larger amount of external maintenance (e.g. gardens, pools) and attention that an individual house will need, and the building’s manager or Body Corporate will usually take care of most building and remedial work that is required.  However, having this advantage comes at the cost of body corporate fees  to the investor, which may have an adverse effect on the rental income that the property delivers.

Investors should also consider the length of time they plan to hold on to a property for and the capital gains desired from the investment.  Using historical pricing as a guide, we have seen that both houses and Units experience value gains; over a short to medium-term period, houses and Units appear to show similar price gains, however over the longer term houses may see larger growth in value.

For investors, rental potential and income are other factors that require consideration.  Many real estate agents believe houses to hold appeal for a larger market of renters, including families with children and pets, who may steer clear of Unit living.  Houses also often allow a higher rent to be charged.

Having said this, however, price is obviously a factor that will be of pertinence to many buyers, whether purchasing as an investment or home.  While some Units can be more expensive than houses (e.g. penthouses with water views in costly suburbs), in general terms, houses are usually the more expensive purchase, especially if you are comparing properties in the same area.  Units therefore may be a more friendly purchase option, especially for first-time buyers.    

Location & Space

High density housing is commonly found in city areas and suburbs that are only a short distance from the CBD.  Thus, if you desire an inner-city lifestyle, a Unit may be the best property option.  However, if you wish to live further away from the city and have enough room to accommodate several people including children and pets, you may find the extra space (both internally and externally) that a house usually provides may be more appropriate for your situation. 

In the end, the choice between an apartment and a house very much comes down to your personal circumstances.  By thinking about your needs and thoroughly researching the property market at the time you wish to buy, you should be able to reach a decision that is suitable for your situation.