This may become the best investment you’ll ever make. And if your son or daughter is heading to university this year, it will also buy you priceless peace of mind.
Instead of wasting money on rent, smart parents are snatching up buy-to-lease properties near their child’s College or University. They earn through renting rooms to their children, friends, and other students which stand a high chance of securing capital appreciation when they eventually sell.
Student numbers are growing dramatically, too. Now property investment firms are saying students have taken over from people working in finance as the biggest tenant market in the capital.
But the Money Charity is warning that today’s students suffer a cost-of-living crisis. It has surveyed accommodation near 150 universities – and found it to be of decent quality and expensive. So here are 7 tips to avoid that worry and invest in your child’s future in a booming market.
1 Go big
Buying an old house, maximizing the number of bedrooms and squeezing in lots of students, bachelor pad are no longer good enough. Students now demand high-quality fittings, en-suite bathrooms, Wi-Fi and lots of parking.
2 Buy near the college
Colleges charge lots of money for student parking, so accommodation on bus routes or within walking distance is perfect. New-builds are usually located away from densely packed terraced residential areas and closer to public transport routes.
3 Consider the long term
“A one-bed studio will be cheapest, but a two-bed flat means you can earn extra rent by leasing to another person. It also increases your long-term rental or resale opportunities to include professional couples or young families.
4 Fixtures and fittings
Updated homes are likely to have high-quality landlord-friendly fixtures such as easy-to-replace kitchen worktops, cupboard doors and vinyl floors. And remember – students are hard on furniture, so budget to replace some items every two years.
5 Target your student renter
Your son and daughter may return to your family between terms, but let that second bedroom to an overseas student, and you may well guarantee year-round income. This will increase your yield – the proportion of the property’s purchase price secured annually in rent.
6 Consider using a leasing agent
It costs 1-2 months of rental income, but this is tax deductible. It means you don’t have to find or vet tenants and suffer late-night interviews.
7 After graduation
Being a landlord doesn't have to end when your children go from school to work. Do some research and be prepared to continue leasing or sell if necessary – But play it right and your family will have a good investment as well as a great education.