Are you considering buying a property for your child when they go off to university? Or do you live in a university/college town and are considering investing in student housing? Student housing is a very lucrative investment opportunity. Buying a property in smaller university towns is often less expensive and can create more revenue than buying a property in a major city. Before you make any decisions, it is important to weigh the pros and cons of student housing.
As mentioned above, buying a house in a smaller university town like Hamilton, Waterloo, or London is significantly cheaper than buying a house in Toronto. For example, in Hamilton, a 4-bedroom house is roughly $500,000. In Toronto, $500,000 could perhaps get you a 1-bedroom. In Hamilton, you could rent to 4 people, perhaps 5 or 6 if you can add rooms in the basement. This means more revenue for you on a monthly basis.
It might seem risky renting to students who have no credit history, part-time income, and potential debt. But for most students, their parents are the ones covering the cost of their living expenses. After the proper background checks, you are essentially renting to a person with a secure source of income and a full-time job.
If you have a nice property close to campus, you can almost guarantee you will always have tenants. Most students live on campus for their first year. For the remaining three years, they look for nearby properties to rent with their friends. With a surplus of students, locally and internationally, attending Canadian universities you can be assured that there will always be students looking to rent.
The bottom line is university students are young and at times reckless. They are living away from home for the first time and are juggling their studies and social life. For that reason, student rentals can often require higher maintenance. Students will call their landlords for every little problem and try to cover up the larger problems that will cost them their security deposits.
With student parties being prevalent, the rest of the neighbourhood might not take kindly to a student house. You should prepare for warnings or police visits to the property if your tenants are not being considerate of the rest of the neighbourhood. We recommend you buy in an area that has other student housing properties.
Living Far Away:
If you invest in student housing that’s in a town a few hours away from you, it will be much harder to resolve common tenant issues. If you have multiple student housing properties across the province, you might find yourself driving to and from multiple towns in one day. Consider only investing in towns that are accessible to you or connect with local handymen to fix any problems if you are unavailable.
Overall, we believe student housing is a great real estate investment opportunity. It is secure in finding tenants and potentially keeping them for 3-4 years. If you are considering investing in student housing, we recommend you renovate the property before you list. You will not need to use high-end materials but do use materials that are durable and sturdy. The better the material the longer they will last. For more help starting your real estate investment journey click here to see how Knowledge Broker can help.
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