Student Housing, is it profitable?

[afshinrein]

Hello,

Does anyone have any experience with student housing. I am thinking of getting one in Waterloo/Ontario and assign a prop. Management to it. Beside to management part of it, what anyone thinks about its potential for positive cash flow, is it a good project?


Thx

 

[rente]

Hi,
I think this could be great and profitable business..
Student housing is best if the area and location will be near to the schools and city..

 

[Mike Milovick]

QUOTE (afshinrein @ Nov 18 2010, 09:55 PM) Hello,

Does anyone have any experience with student housing. I am thinking of getting one in Waterloo/Ontario and assign a prop. Management to it. Beside to management part of it, what anyone thinks about its potential for positive cash flow, is it a good project?


Thx

For fear of sounding like a completely biassed realtor (I own student housing myself) that works predominanty in student housing in Waterloo (and multi-res in Kitchener), in nine years as a realtor, I really haven`t seen anything better from an investment perspective - and I talking about alternative real estate areas and other investments like stocks and bonds.

I am also vice president of WRAMA (Waterloo Regional Apartment Manager`s Association). I seethe horror stories of regular, residential rentals gone bad. If it was me, I wouldn`t touch non-student rental. But that is based on my experience. Bad students are gone in a year. Bad tenants in Ontario could hang around for YEARS.

Student housing, especially in the Waterloo area, with property managed by a professional outlet like Hoffaco (www.Hoffaco.com), is probably your best niche investment - in the number area (KWC) in Ontario - to invest in.

Note that this type of investment will not appeal to the "no-money down" type of investor. Financing is challenging and you need to bring money (typically 35%+) to the table.

Past performance is not indicative of future performance, by KW has had thirteen years of residential price growth. Demographic and economic fundamentals remain strong in thus area.

Mike

 

[housingrental]

Thank you for the kind thoughts, it`s appreciated!

 

[housingrental]

It can be a very profitable business to be in.

How good of a go you make of it will be based on:

Initially purchasing a quality product -
Location - A fast WALK to the universities -
Setup - Adequate square footage, reasonable non rat-in-a-maze design, and lower bedroom count per washroom / kitchen matter

Features - Adequate fridge/freezer space, dishwasher, laundry, AC, etc.. and
Condition of property - Whole free walls, lighting, clean units, common area`s, exteriors -
Both features and conditions with sufficient cash can be modified after purchase - The key is to budget upgrades in prior to purchase and ensure a spread in purchase price to allow for value to be added through change.
Continually re-investment in maintenance - not try to juice every cent of profit out of the property - will go a long way to have a sustainable revenue stream year after year.

Pro-active management - Maintenance inspections, presentation quality, renting your units many months in advance, treating your students tenants with respect and providing fast response times to their concern, etc.. can often make the difference between having a property that risks vacancy and rents at $450 / bed and one that is always filled 6 months in advance at $500+/bed.

There are disadvantages too:

Minimal supply - You need to be patience when purchasing and be in a position to take immediate action when the right opportunity presents itself Financing - Higher cash needed on initial purchase and potential for less flexibility in future for re-financing if that is a consideration -
Higher operating costs - Insurance, Cleaning, Repairs, etc... can all be higher than non student rentals.

A prudent investor will purchase a property where the higher rent will more than cover these additional costs.

QUOTE (afshinrein @ Nov 18 2010, 09:55 PM) Hello,

Does anyone have any experience with student housing. I am thinking of getting one in Waterloo/Ontario and assign a prop. Management to it. Beside to management part of it, what anyone thinks about its potential for positive cash flow, is it a good project?


Thx

 

[cmerino]

QUOTE (afshinrein @ Nov 18 2010, 09:55 PM) Hello,

Does anyone have any experience with student housing. I am thinking of getting one in Waterloo/Ontario and assign a prop. Management to it. Beside to management part of it, what anyone thinks about its potential for positive cash flow, is it a good project?


Thx


With the kind of market you have in Waterloo, it would be very hard to have a "quick turn" kind of property...

One more tip: you want to make sure it has Student Housing license.

Carlos Merino

 

[Nir]

Hi Afshin,It should be "Helping investors find (not finding) their gold mine
for the west of Toronto".
You`re welcome,
N.

 

[rickm]

QUOTE (afshinrein @ Nov 18 2010, 07:55 PM) Hello,

Does anyone have any experience with student housing. I am thinking of getting one in Waterloo/Ontario and assign a prop. Management to it. Beside to management part of it, what anyone thinks about its potential for positive cash flow, is it a good project?


Thx

My wife and I have invested in a student rental for over 2 years now. It`s a duplex near the UofCalgary that we self manage. Guys on one side, girls on the other.

This summer we attended two weddings that arose out of the mix.

Lesson learned from the past two years: student rentals are very profitable, but take lots of PM work. And large tenant Christmas baskets get talked about for months.

Go for it.

-Rick

 

[invst4profit]

Adam is it realistic to believe/expect a PM company will operate a student rental to the standards you outline for success.

 

[housingrental]

Hi Greg

My company does

I'm sure there have to be some others, somewhere, that do too

You do bring up a good point though - Most PM companies will not - And many that provide quality, or at least a reasonable level of service when managing non-student properties don't seem able to pull it together for a student rental.

Prior to purchase make sure there is a management company available in your area that has significant experience in the tenant profile you are seeking - this holds true for investment property not just student rentals.




QUOTE (invst4profit @ Nov 27 2010, 11:33 AM)
Adam is it realistic to believe/expect a PM company will operate a student rental to the standards you outline for success.

 

[bizaro86]

QUOTE (rickm @ Nov 27 2010, 12:08 AM) My wife and I have invested in a student rental for over 2 years now. It`s a duplex near the UofCalgary that we self manage. Guys on one side, girls on the other.

Interesting! Do you rent it out by the room, or by the side to a self-selected group? Are you running with year long leases? What has your experience been in the summer with regards to occupancy? Sorry to quiz you out, but you`re the first person I`ve encountered here with that model in Calgary, and I`m curious.

Regards,

Michael

 

[westboundventures]

I don`t personally invest in Student Rentals, but my preferred niche is quite similar.

I invest in carefully selected properties in Whistler, BC to rent furnished to seasonal workers and for staff accomodation. There is solid demand for this type of rental year-round if the property/location is right. The cashflow I have been able to generate with this strategy is among the best I`ve seen from any investors.

It is similar to student housing for many reasons:
- similar tenant profile
- good cashflow
- similar housing setups (higher number of bedrooms per square foot)
- shorter term rentals (6 months to 1 year typically)
- most have additional financial backing from their parents
- walking distance location very important (to the resort centre rather than the school in my case)
- expectation of higher maintenance budgets

For anyone focused on cashflow, I think student rentals can be a great option. Just make sure you are eductated and prepared, this type of rental can take a bit more work than a regular rental until you gain experience and get the right systems in place. (I advocate self-managing for your first couple of years before delegating to a property manager - the experience is very helpful)