I've noticed through my time in the real estate industry that 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.
In my opinion, when purchasing a residential property for investment purposes, people 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? My 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.