{"id":1217,"date":"2020-01-14T14:25:48","date_gmt":"2020-01-14T14:25:48","guid":{"rendered":"https:\/\/rankmyagent.com\/realestate\/?p=1217"},"modified":"2020-01-14T14:25:49","modified_gmt":"2020-01-14T14:25:49","slug":"making-a-real-estate-investment-in-student-housing","status":"publish","type":"post","link":"https:\/\/rankmyagent.com\/realestate\/making-a-real-estate-investment-in-student-housing\/","title":{"rendered":"Making a Real Estate Investment in Student Housing"},"content":{"rendered":"\n

In 2018, the Canada Pension Plan Investment Board (CPPIB)<\/a>\nacquired a student housing portfolio worth $1.1 billion. This portfolio\nconsisted of 13,666 beds across 20 American university campuses. To Canadians,\nthis revealed that one of the country\u2019s largest investment boards thought\nstudent housing was a good bet. <\/p>\n\n\n\n

If you\u2019re a real\nestate investor or just have a child heading off to university, buying a\nproperty in a \u201cuniversity town\u201d, where prices are often lower than major cities\nlike Toronto or Vancouver, can be enticing. While the average price of a home\nin Toronto is roughly $920,000, an average home in London, Ontario (home to\nWestern University) is almost 1\/3rd of that at $344,815. <\/p>\n\n\n\n

In this blog\npost, we explain the benefits and downfalls of investing in student housing.\nThis post clarifies some myths of the opportunity, and explains what to keep in\nmind when investing in a property targeted at student tenants. <\/p>\n\n\n\n

The\nbenefits of student housing investments<\/h2>\n\n\n\n

Student tenants.\nYou\u2019re effectively renting to someone with no credit history, plenty of debt,\nand no full-time income. Or are you? Although this profile is common for students,\nit\u2019s also common that the student\u2019s parents pay most or all of their rent and\nexpenses. And with a parental guarantee that rent will be paid, this tenant\nturns into a secure source of income, even less risky than someone who may have\na full-time job. This is why a risk-averse investor such as the Canadian\nPension Plan is willing to invest in it. <\/p>\n\n\n\n

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A property close\nto a university may also mean guaranteed tenants. One article<\/a> found that only 3% of Canadian\nstudents lived in university-provided housing, with the remaining 97% commonly\nliving with parents or at nearby rental units. <\/p>\n\n\n\n

There\u2019s no\nshortage of university students. In recent years, international students have\nenrolled in Canadian universities at an increasing rate. Other countries that\nwere once popular for international students such as the U.S. and the U.K. have\nhad unfavourable attitudes towards immigrants in recent years, which has\nresulted in more interest in Canada. This is why among new Canadian\nnon-permanent residents, international students were the largest\ncontributor.  The best part is that each\nof these students needs a place to live. Thus the growing number of\ninternational students has made student housing more popular with real estate\ninvestors. <\/p>\n\n\n\n

As mentioned\nprior, student housing often has a lower barrier to entry than a condo\ninvestment in downtown Toronto. Although cities such as Waterloo, Ontario, or\nLondon, Ontario, are seeing real estate values appreciate, they\u2019re still much\nmore reasonable than what you would find in Toronto. <\/p>\n\n\n\n

The\npitfalls of investing in student housing<\/h2>\n\n\n\n

Student housing\nisn\u2019t all rainbows and sunshine. Although it\u2019s a secure investment for the most\npart, some aspects of it can make it particularly tough. Students may not care\nabout the property as much as a tenant who is older and more mature. University\nhouse parties run rampant as part of the school culture, dirty dishes are\nusually left in the sink for weeks, and there\u2019s often plenty of alcohol and\ndrunk students around. This could result in damage to the house or other issues\nlike mould or vermin. <\/p>\n\n\n\n

And if you\u2019ve\npurchased a property that\u2019s in a different city that\u2019s an hour or more away,\ncommon tenant issues are even more difficult. Toilets and drains get clogged,\nheating systems might break, or a window can crack. These all require your\nimmediate attention. To prevent a 2-hour drive in the evening to fix a clogged\ntoilet, it\u2019s a good idea to keep some local plumbers or repair people in mind.\nBetter yet, you could simply pay a property management company to take care of\neverything for you (but you remember that this would eat into your cash flow). <\/p>\n\n\n\n

What\nto keep in mind when you purchase a property targeted at student tenants<\/h2>\n\n\n\n
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Students are a\ndifferent but similar ball game to regular tenants. You often hear investors\nmention the number of \u201cbeds\u201d they own, which refers to how many tenants they\ncan accommodate. To maximize your returns on a student housing investment, you\nwant to maximize the number of students living there (within reason). This\ndoesn\u2019t mean covering every square inch with a bunk bed. However, a 3-bedroom\nhouse could be made into a 5-bedroom by adding two rooms to the basement. <\/p>\n\n\n\n

Students may be\ncheap, but they still desire good living accommodations. In fact, student\nrentals are more often going towards the luxury-end now. Well-off international\nstudents who can afford to study abroad want high-end living accommodations,\nand as more of these international students choose Canada as their next\neducational venture, this demand increases. \nIt\u2019s all about finding a balance between maximizing tenants while having\na luxurious living space. <\/p>\n\n\n\n

If you plan to\nrenovate a property before listing it for tenants, there are a few items to\nkeep in mind so that the space is suitable for students. This includes using\nquality, but not particularly high-end, installations like sinks or toilets.\nMost of the cost for renovations comes from the cost of labour, so why cheap\nout on a few hundred dollars on a sink that lasts longer? Materials such as\nlaminate or vinyl tiled flooring are also solid and cost effective. <\/p>\n\n\n\n

Do your\nrenovations during the summertime when students aren\u2019t around. You can even\nstagger them year to year. If you have a renovation that requires clearing the\nwhole house, you could list your property for an 8-month lease instead of 12.\nAlthough you\u2019re losing out on 4 months of rent, you can charge more during\nthose 8 months, since 8-month leases are typically more desired by students. <\/p>\n\n\n\n

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Students are\ngreat tenants to have. Although they lack credit scores or full-time incomes,\nit\u2019s usually their parents paying the monthly rent. The increasing number of\ninternational students also means that there\u2019s no shortage of students looking\nfor housing accommodations. Although partying and managing a property in a\ndifferent city may be difficult, it can be worth the stability. Make sure to\nfind a balance between creating a great living space for students while also\nmaximizing how many tenants you can have in a house.
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In 2018, the Canada Pension Plan Investment Board (CPPIB) acquired a student housing portfolio worth $1.1 billion. This portfolio consisted of 13,666 beds across 20 American university campuses. To Canadians, this revealed that one of the country\u2019s largest investment boards thought student housing was a good bet. If you\u2019re a real estate investor or just […]<\/p>\n","protected":false},"author":1,"featured_media":1220,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[43,44,38],"tags":[392,212,141,147,74,383,382,389,405,269,82,391],"class_list":["post-1217","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing-in-real-estate","category-landlord-tips","category-renting","tag-college-renting","tag-landlords","tag-real-estate-investment","tag-renovations","tag-renting","tag-student-housing","tag-student-life","tag-student-rentals","tag-students","tag-tenant","tag-things-to-consider-when-renting","tag-university-rental"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/posts\/1217","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/comments?post=1217"}],"version-history":[{"count":2,"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/posts\/1217\/revisions"}],"predecessor-version":[{"id":1225,"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/posts\/1217\/revisions\/1225"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/media\/1220"}],"wp:attachment":[{"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/media?parent=1217"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/categories?post=1217"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/tags?post=1217"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}