Investing in real estate can be a great way to build wealth over time, and student investment properties can be an excellent option for those looking to invest in property. Student properties tend to have a high demand, as there is always a large number of students looking for accommodation.
If you are wondering if investing in student property is a good idea, then the affordable prices, higher yields and inner-city locations you can find help to convince you why it is such a popular investment strategy right now.
However, before investing in a student property, there are several things you should consider. In this blog post, we’ll discuss the 5 things to look for in a student investment property.
The location of a student investment property is one of the most important factors to consider. When it comes to student properties, location is key. You’ll want to look for properties that are close to universities, public transportation, and other amenities that students need. The closer the property is to the university, the higher the demand is likely to be. Students tend to prefer properties that are within a 20-minute walk or a short bus ride to their campus.
Investing in student property in the UK is also an excellent choice, as it has a large student population. According to the Higher Education Statistics Agency (HESA), there were over 2.8 million students enrolled in UK universities in the 2021/22 academic year. This means that there is a high demand for student accommodation, making the UK a great place to invest in student properties.
Cities such as Liverpool and Manchester are ideal locations to purchase student property investments, as they both have multiple popular universities, lots of public transport options and high-quality amenities like bars, shops and libraries.
They also both have affordable property prices, meaning it is cheaper to invest in these cities than elsewhere in the UK. Thanks to this, Liverpool and Manchester student property investments are always very popular.
The size of the property is another important factor to consider when investing in a student property. Typically, student properties are smaller in size and have fewer bedrooms. However, the more bedrooms a property has, the more rental income it can generate. You’ll want to find a balance between the number of bedrooms and the rental income.
When it comes to student properties, it’s important to keep in mind that larger properties can attract more students, which can lead to higher wear and tear. This means that you’ll need to factor in the cost of maintenance and repairs when determining the profitability of the investment.
Many student property investments are HMO’s, or Houses of Multiple Occupancy, where several students share the communal areas of the property and have their own single rooms. This allows you to get multiple streams of rental income for the same property.
Ideally, you should look for student investment properties which have between 3-5 bedrooms, as this allows you to collect more rental income while avoiding the added wear and tear that comes with more students living in the same property.
Rental yield is another crucial factor to consider when investing in a student property. Rental yield is the amount of rent you can expect to receive compared to the property’s purchase price. Ideally, you’ll want to invest in properties that have a high rental yield. The higher the rental yield, the better the return on investment.
To calculate rental yield, you can divide the annual rental income by the property’s purchase price and multiply it by 100. For example, if you purchase a student property for £200,000 and generate £20,000 in annual rental income, your rental yield would be 10%.
When it comes to student properties, it’s important to keep in mind that rental income can fluctuate throughout the year. This is because most students only occupy the property for nine months out of the year. To ensure that you’re generating a steady stream of rental income, you’ll need to plan for this and adjust your rental rates accordingly.
Generally, a rental yield of between 4-5% should net you a solid return from a student investment property, but by being savvy you can find developments with yields of 6% and higher.
To get a high yield from student property investments, invest in cities like Liverpool with large student populations and affordable prices.
The condition of the property is another crucial factor to consider when investing in a student property. You’ll want to invest in a property that does not require much in the way of renovations or repairs when you buy it, as this will eat into your budget and be an added cost.
Ideally, new-build properties make for a great student investment property, as these will not require any refurbishments or repairs at the time of purchase. New-build developments are also attractive to students, due to their modern designs and ideal locations close to university campuses.
By buying an older property, you run the risk of having to fork out extra money to modernise it or to repair any damage caused by previous tenants. Student property is traditionally furnished by landlords, so the condition of furniture also needs to be accounted for in your budget.
If you are getting into student property investment, finding high quality in both the property and the furnishings is vital to ensuring a strong return.
Finally, when you are looking to get into student property investment, you will need to consider who will manage the property and take care of the day-to-day running of things.
Many student investment property landlords choose to run their investment themselves, and this can involve contacting tenants to organise viewings, contracts, deposits and payments. This is sometimes a lot of work, as you are usually dealing with more tenants per property than you would with a traditional buy-to-let property.
You are also responsible for any repairs and replacements that need to happen throughout the tenancy, and unless the tenants are responsible then this will need to come out of your own pocket. With more tenants living in the same property, there’s a higher chance of wear and tear, especially with the social side of student life that often comes with moving to university.
Some investors may not have the time, patience or temperament to put in the necessary work, and so may look for a property management company to help take the stress out of their life.
Property management companies handle the day-to-day operations of a student investment property in return for a percentage of the rental income you earn. This frees up your time for other ventures and means you don’t have to worry about texts from your tenants at all hours of the day.
The short answer is yes! Student property investment offers cheaper prices, higher rental yields and more demand in major cities than traditional property investment.
You can make high returns by investing in student property while benefiting from consistent demand and fewer void periods.
Ideally, look for a combination of the five factors mentioned in this blog. In addition, consider amenities such as parking spaces, laundry machines and en-suite bathrooms to help make your student investment property more desirable to potential tenants.
Hopefully, this blog has given you the information you need to find high-quality student property investments.
The Exchange Liverpool is a modern, up-to-date student investment property in the heart of one of the UK’s biggest student cities, and is a shining example of what UK student property can offer.
Investing in the Exchange Liverpool can offer:
If you are still asking the question ‘Is student property a good investment’, try reading our other blogs here for more information.
Alternatively, if you want to know more about the Exchange Liverpool, why not request a brochure today?
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