People sometimes ask me questions about student accommodation as multiple dwelling investment. Whereas I have not done it myself I know some investors who have. So, I caught up with one such investor, Ken Poggioli, to get his tips and views.
Ken’s entry into student accommodation was accidental. He had purchased a five-bedroom house as a rental some years ago. Here is how Ken described it to me: “We had a five bedroom that was rented and managed by a property agency. Because it was badly managed, we decided to do it ourselves. A friend who worked at a nearby university told me that there was always demand for accommodation for students. So, we decided to try student accommodation. Although there was an element of work involved, collecting rent and, signing up new tenants, and clean communal areas -the increase in rent (about 50%) more than compensated for this.”
With this success (now positive cash flow) Ken purchased another house and converted it into student accommodation also. This was not as successful as the first because of the location. Students want to be near either the social action or the University for the study.
These are some of Ken’s tips for successfully investing on student accommodation:
- Position is important. Students want to be near their place of study and the social scene.
- Being compliant with local authority regulations is important.
- Non-compliance can mean non-insurance.
- Spring clean the property every year.
- Treat it as a service business. Fix things that break as students will refer other students to you.
- Have a backup plan if tenants dry up. This occurred during Covid 19. That back up plan could be to list on Airbnb or switch to a boarding house.
- Get tax advice on your structure and GST because you may be entitled to small business Capital Gains concessions when you come to sell.
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