Buying student accomodation. Thoughts?
Discussion
blueg33 said:
If the return is much ahead of other bits of the investment market then there is probably some enhanced risk. I wonder how easy it os to sell on the studio?
TBH if its good and the risk is contained I would be interested, I need to find an investment home for £100k at the moment.
Well if investment's the aim the two of you could always join forces and put your 200k this way....TBH if its good and the risk is contained I would be interested, I need to find an investment home for £100k at the moment.
http://www.rightmove.co.uk/property-for-sale/prope...
If they are genuinely returning 10% over the long term why are they funding it via retail investors?
I completely get renting to students, I do it. I don't get why on earth you would buy a property that can only ever be rented to students? It makes no sense to me, especially in the locations listed on that site.
I completely get renting to students, I do it. I don't get why on earth you would buy a property that can only ever be rented to students? It makes no sense to me, especially in the locations listed on that site.
It's no coincidence that people selling these student pods are the same as those who sell hotel room ownership or foreign resort properties.
The yield they (allegedly) provide is high, no stamp duty, what's the catch?
Well there is no guarantee, despite what they say. And you can't sell them on, unless you find a buyer. Which is unlikely.
The yield they (allegedly) provide is high, no stamp duty, what's the catch?
Well there is no guarantee, despite what they say. And you can't sell them on, unless you find a buyer. Which is unlikely.
Universities have realised that student accommodation is a profitable business to be in.
In Sheffield they were building student flats as fast as they could 5 years ago and the number of student houses struggling to find tenants was growing. The flats were modern with everything the students required at a similar cost to a room in a shared house. No fight for the bathroom....
I am sure money can be made but you will have a very large competitor!
In Sheffield they were building student flats as fast as they could 5 years ago and the number of student houses struggling to find tenants was growing. The flats were modern with everything the students required at a similar cost to a room in a shared house. No fight for the bathroom....
I am sure money can be made but you will have a very large competitor!
Moominho said:
It's no coincidence that people selling these student pods are the same as those who sell hotel room ownership or foreign resort properties.
The yield they (allegedly) provide is high, no stamp duty, what's the catch?
Well there is no guarantee, despite what they say. And you can't sell them on, unless you find a buyer. Which is unlikely.
Want to hazard a guess what these guys are up to these days? : http://www.manchestereveningnews.co.uk/business/bu...The yield they (allegedly) provide is high, no stamp duty, what's the catch?
Well there is no guarantee, despite what they say. And you can't sell them on, unless you find a buyer. Which is unlikely.
OP - seriously, put you money elsewhere, into something over which you have control.
nikaiyo2 said:
If they are genuinely returning 10% over the long term why are they funding it via retail investors?
I get this kind of email all the time and that's the first thing that always occurs to me. If these schemes were as good as indicated then the general public wouldn't even hear about them.What risk does the leaseholder have in respect if repairs, maintenance etc.?
Where in the pecking order is the investor's poke if the management company goes skint?
Is the guarantee dependant on the unit(s) being let? I.e. If the units in the block don't get let for some reason, where does the money come from to pay investors?
Is the property mortgageable?
What conditions attach to any future sale of the unit?
Etc.
Lenders are falling over themselves to lend and interest rates are very low: why the need to borrow from individuals at higher rates and more associated hassle?
Where in the pecking order is the investor's poke if the management company goes skint?
Is the guarantee dependant on the unit(s) being let? I.e. If the units in the block don't get let for some reason, where does the money come from to pay investors?
Is the property mortgageable?
What conditions attach to any future sale of the unit?
Etc.
Lenders are falling over themselves to lend and interest rates are very low: why the need to borrow from individuals at higher rates and more associated hassle?
drainbrain said:
Well if investment's the aim the two of you could always join forces and put your 200k this way....
http://www.rightmove.co.uk/property-for-sale/prope...
Not sure I want to live with some random bloke from the internet in a remote area!http://www.rightmove.co.uk/property-for-sale/prope...
Storer said:
Universities have realised that student accommodation is a profitable business to be in.
In Sheffield they were building student flats as fast as they could 5 years ago and the number of student houses struggling to find tenants was growing. The flats were modern with everything the students required at a similar cost to a room in a shared house. No fight for the bathroom....
I am sure money can be made but you will have a very large competitor!
They still are in Sheffield, developments everywhere. I don't know how the 'traditional' student house model will survive.In Sheffield they were building student flats as fast as they could 5 years ago and the number of student houses struggling to find tenants was growing. The flats were modern with everything the students required at a similar cost to a room in a shared house. No fight for the bathroom....
I am sure money can be made but you will have a very large competitor!
I've got a couple of clients heavy into student lets and they report that every year it takes longer to get their rooms let. These are places in very decent locations so I'm not personally keen on the long term private property market for students....
Sheepshanks said:
I get this kind of email all the time and that's the first thing that always occurs to me. If these schemes were as good as indicated then the general public wouldn't even hear about them.
Spot on. If it sounds too good to be true, it is.If I was the developer and could get those returns I would get finance and pocket the difference, not offer some of my return to strangers.
The games been over a long time.
So you have a block of student units and promise 10% a year for five years, in between times another new one is built up the road (by the same people) the 10% expires and it's time for a refurb by the freeholders letting agent (maybe associate firm) as a student property is high maintenance, so new kitchen/bathroom and full redec plus replace furniture and maybe time to brush up the outside as well at a huge markup!
But in the meantime the new propertiy down the road is new everything-which would you rent first ?? Then you try to sell a leasehold property in a block of students that may be half empty...it's been a scam
So you have a block of student units and promise 10% a year for five years, in between times another new one is built up the road (by the same people) the 10% expires and it's time for a refurb by the freeholders letting agent (maybe associate firm) as a student property is high maintenance, so new kitchen/bathroom and full redec plus replace furniture and maybe time to brush up the outside as well at a huge markup!
But in the meantime the new propertiy down the road is new everything-which would you rent first ?? Then you try to sell a leasehold property in a block of students that may be half empty...it's been a scam
Oddly I went to university in Huddersfield, and my halls was just down the road from there - in a Victorian mansion no less.
BP002 by Eric, on Flickr (not my picture)
Not sure I would put my money in that, unless it's changed a lot it's not really an area students want - not great amenities and a good 30 mins walk into town proper.
It doesn't look like there is a massive shortage of student accommodation in Huddersfield at the moment - http://www.hudlets.su/halls-studios/ and is it just me or is modern student accommodation both fantastic and really expensive?
BP002 by Eric, on Flickr (not my picture)Not sure I would put my money in that, unless it's changed a lot it's not really an area students want - not great amenities and a good 30 mins walk into town proper.
It doesn't look like there is a massive shortage of student accommodation in Huddersfield at the moment - http://www.hudlets.su/halls-studios/ and is it just me or is modern student accommodation both fantastic and really expensive?
Here is an example of the information I'm receiving ;
Unlike most, our award-winning and experienced developer is fully NHBC accredited and has absolutely zero bank exposure. This means that the main risks and expenses normally associated with real estate development have been eliminated.
To fund projects, whilst maintaining cash liquidity, the developer sells the individual units from within each development to investors on long-term leaseholds.
The developer retains ownership of the freeholds and are fully responsible for the maintenance of all communal areas.
The sale of these units is designed to cover all initial purchase/construction/refurbishment/start-up costs associated with development preparation before letting.
The developer maintains control and responsibility of each development by renting units back from investors, becoming the contractually fixed tenant for the next 10 years. This means they are contractually obliged to pay investors, regardless of the actual circumstances of the property.
The developer will then sub-let the units at a premium, taking full responsibility for the process, and benefitting from any upside it achieves.
Please bear in mind that this structure of long-term tenancy is unfortunately incompatible with mortgages, and as such, all investor purchases are cash-only.
Every unit is individually priced to be comfortably self-sufficient, whilst providing a market leading yield to investors. The gross income covers all associated costs, whilst also providing the developer with their own net return as well. The developer’s profit margin will increase as the gross income increases each year.
This structure ensures that interests are aligned and all involved are incentivised towards the same goals.
The investor is not responsible for any costs throughout the investment, and is free to sell at any time.
High yields have proven to be vital at resale. The price of an investment property does not change independently from its yield. It is in fact purely driven by its ability to generate income, since the purchaser is always an investor, and never the end user. Therefore, the price should only be high if the yield is high.
Investors are naturally prepared to take a lower yield percentage for the inherent benefits of an immediate income.
Capital growth from a fixed income agreement is achieved through yield compression. The higher the fixed income agreement, the better the possibilities are. In general, as soon as a property is providing a net income of 10%, a capital growth of 20-40% is a very reasonable expectation, given the other alternatives on the market. A premium is commanded by completed properties with immediate income because most investments being offered are off-plan. We offer to resell all properties for clients at any requested time.
At the end of the initial 10 years, the developer will review the real increase in gross income, and offer another investment period to all investors. The investor could also choose to take full responsibility at this point, taking full control of the variable gross income.
The key is absolute alignment of interests.
Remember, investors are free to sell at any time after completion, and we offer to resell all of our properties for clients.
Unlike most, our award-winning and experienced developer is fully NHBC accredited and has absolutely zero bank exposure. This means that the main risks and expenses normally associated with real estate development have been eliminated.
To fund projects, whilst maintaining cash liquidity, the developer sells the individual units from within each development to investors on long-term leaseholds.
The developer retains ownership of the freeholds and are fully responsible for the maintenance of all communal areas.
The sale of these units is designed to cover all initial purchase/construction/refurbishment/start-up costs associated with development preparation before letting.
The developer maintains control and responsibility of each development by renting units back from investors, becoming the contractually fixed tenant for the next 10 years. This means they are contractually obliged to pay investors, regardless of the actual circumstances of the property.
The developer will then sub-let the units at a premium, taking full responsibility for the process, and benefitting from any upside it achieves.
Please bear in mind that this structure of long-term tenancy is unfortunately incompatible with mortgages, and as such, all investor purchases are cash-only.
Every unit is individually priced to be comfortably self-sufficient, whilst providing a market leading yield to investors. The gross income covers all associated costs, whilst also providing the developer with their own net return as well. The developer’s profit margin will increase as the gross income increases each year.
This structure ensures that interests are aligned and all involved are incentivised towards the same goals.
The investor is not responsible for any costs throughout the investment, and is free to sell at any time.
High yields have proven to be vital at resale. The price of an investment property does not change independently from its yield. It is in fact purely driven by its ability to generate income, since the purchaser is always an investor, and never the end user. Therefore, the price should only be high if the yield is high.
Investors are naturally prepared to take a lower yield percentage for the inherent benefits of an immediate income.
Capital growth from a fixed income agreement is achieved through yield compression. The higher the fixed income agreement, the better the possibilities are. In general, as soon as a property is providing a net income of 10%, a capital growth of 20-40% is a very reasonable expectation, given the other alternatives on the market. A premium is commanded by completed properties with immediate income because most investments being offered are off-plan. We offer to resell all properties for clients at any requested time.
At the end of the initial 10 years, the developer will review the real increase in gross income, and offer another investment period to all investors. The investor could also choose to take full responsibility at this point, taking full control of the variable gross income.
The key is absolute alignment of interests.
Remember, investors are free to sell at any time after completion, and we offer to resell all of our properties for clients.
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