David Sullivan, Managing Partner
There are a number of opportunities to invest in high-end student accommodation blocks that are springing up around the country. Mostly these investment opportunities look very appealing to investors as they are hands off investments, with the blocks being run in a completely managed service and returns on your investment guaranteed for 5 years with a 10 per cent yield.
Whilst this may look like a more attractive prospect than the option of buying a flat or house to let out to students, there are a number of factors to consider.
The first is the longevity of the investment – after 10 years the block will have a lot of wear and tear and this will make them a less attractive prospect to students looking to rent. Getting money spent on shared areas to improve the look and feel of these blocks after 10 years may not be easy.
In addition, these blocks are made up of hundreds of flats which will have been sold to investors around the same time as you purchased yours. This means that there are a couple of hundred other investors looking to continue their yields after the 10 year period. This means that attraction to your particular property will be made more difficult.
However, if you purchase a house or flat that is not in a student block, whilst you may not secure guaranteed yields, you can secure a hands off approach to your investment in the same way as you would get with the secured yield investment and you can guarantee your rental income too.
Getting a property management company to manage the property for you means that you aren’t the one who is getting a phone call from the students at 7pm on a Friday night when their fridge stops working. In addition, most property management companies offer guaranteed rental income, so if this is the attractive part of the potential investment in student blocks, it is achievable without taking that particular route.
Finally, a house or flat will almost always increase in value from the time you purchased it so you can be reasonably confident that your investment will grow and grow over the years.
For more information about this article or any aspect of our commercial property legal solutions, please call David Sullivan on 028 9077 4500 (there is no charge for initial telephone discussions).
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