I'm thinking of buying a property to use for student accommodation.
I'm want to buy a multiple room dwelling and rent out the individual
rooms. I'm wanting to know what will make the property more desirable
to students and at the same time increase my rental returns and RETURN
ON INVESTMENT. I'm aware that proximity to universities helps, as does
having the room fully furnished. Internet connection may increase the
desirabilty of the room as well as it being a clean/tidy house.

So I'm wanting to know what will increase my rental returns for this
property (renting out individual rooms) and make it desirable to
students. It is a given that proximity to universities will help, as
well as being fully furnished and it looking descent. I only want to
have 1 student per room and the opportunity for ensuites for each room
are also limited.

It is important that I get a good return on my investment.

Hi there Mark,

As an owner of several student houses myself, I can offer you advice
based on first hand experience.

If you plan on investing in a house, generally all the tenants living
in that house will be friends with each other, specifically looking
for a house with that number of bedrooms.  It is extremely rare for 3,
4 or 5 tenants (depending on the size of the house and # of available
rooms) who do not know each other to be living under the same roof.
Students tend to not do this and would prefer living on campus or
bachelor pads.

When choosing a house to invest in, you will find that most houses
have a master bedroom which is significantly bigger than the other
rooms.  I would recommend selecting a house that has fairly evenly
sized bedrooms because the idea that one or two will have to take a
smaller room usually turns students away.

Most students don't go through many houses during their house hunting
process and often settle for the first house that stands out in their
minds.

What usually catches the attention of students most are either nice
renovations & a well conditioned house, big rooms, or prime proximity
to campus. Even a cheap renovation can justify increasing rent by
15-20% on the rooms for several years. However, furnishing the house
would not be a great idea because most students prefer to bring their
own beds, desks and sofas. If the student doesn't like the particular
style of, for example, the sofa, he/she might ask if it would be
possible for you to move it. Furthermore, university students tend to
party a lot and investing in nice furniture would only increase the
risk of you having to replace them due to damage or spillage.
Therefore, to avoid clashes of styles and taste and possible
replacement costs, it is actually better that the house does not come
fully furnished. I would, however, recommend that you consider
investing in a BBQ stove to put on the front porch or back yard.

Internet connection in the house does not have to be a given as long
as internet jacks are available in each room. Students usually do not
expect there to be an Internet connection already in place and it
would be more cost beneficial to you to give the responsiblity of
setting up an Internet connection to the students themselves. The same
can be said for cable TV. Internet jacks are also more favourable
because students do not need to have ethernet cables running along the
floors throughout the house. Most university-student houses on the
market do not have this and would, therefore, make your house a lot
more attractive to students. The house/apartment would look a lot
neater and tidier.

Giving students/tenants the freedom to paint their rooms is usually a
huge plus as well.

With the features I have described to you above, it becomes more
reasonable for you to charge a higher rent on each room or the house
as a whole and convincing the students to choose your house will be a
lot easier.

I hope this has helped and if you have any further questions, or would
like clarification on any part of the answer, please don't hesitate to
ask.

Cheers,
Tox-ga

---

Request for Answer Clarification by mark1962xyz-ga on 13 Sep 2005 03:58 PDT

Dear Tox-ga

I'm not satisfied with the answer you gave me. I didn't write to
google answers to hear one person's opinion. I wanted a summary on
what was written on the net about this topic. I will go through the
content of what you said and my views on your opinion, but I didn't
ask for your opinion.

1. This reply is not a researched based answer, it is an answer based
on one person's opinion who claims they own student accomodation.
 
2. Paragraph 1 and 2 add nothing to the requested answer
 
3. Paragraph 3, I'd suggest that it is the size of the room that turns
people away not that there are different sized rooms.
 
4. Paragraph 4 adds nothing to the requested answer.
 
5. Paragraph 5 you said "nice renovations & a well conditioned house"
I already said "it looking descent".
 
You said "big rooms", I think this is a given in the real estate
market as a whole, be it student accomodation, home/unit rental,
home/unit ownership, commercial/industrial property. I don't think
this comment contributes anything to anyones knowledge.
 
You said, " prime proximity to campus" I said, "It is a given that
proximity to universities will help".
 
The comment about not furnishing the rooms is interesting. Your
opinion is at odds with all the property managers I have spoken to who
manage student accomodation. (I have spoken to many property
managers). If I had to make a decision as to whos opinion to go by, I
think I would go with all the professional property managers.
 
I do however agree with the Barbeque statement. I must admit I had
already thought of this but not put it down.
 
6. Paragraph 6. I think your whole internet reasoning is interesting.
You say, "Internet jacks are also more favourable because students do
not need to have ethernet cables running along the floors throughout
the house. Most university-student houses on the market do not have
this and would, therefore, make your house a lot more attractive to
students. The house/apartment would look a lot neater and tidier."

I don't know where you are based, but I haven't seen ethernet cables
on floors in years. Networks are either hard wired into the walls or
cordless. To me this is a bit like saying, "having running water and
electricity makes the property more attractive to students". It is
stating the obvious. I don't think your statement adds anything to the
question.
 
You also said "Internet connection in the house does not have to be a
given as long as internet jacks are available in each room." I didn't
say it was a given, but said it may increase the desirability of the
room. The original question said in part, "I'm wanting to know what
will make the property more desirable to students and at the same time
increase my rental returns". You said, "Students usually do not expect
there to be an Internet connection already in place", which is why I
suggested it may make the property more desirable. Your statement, "it
would be more cost beneficial to you to give the responsiblity of
setting up an Internet connection to the students themselves", is
highly questionable. There are significant economies of scale by
buying larger downloads, that could be shared throughout a network.
eg. The cheapest network connection a student could get through
Ozemail would be $25/month. That would be at dial up speed. However
for $80/month at broadband speed (that could be shared among multiple
users) you could get 20 GB of broadband downloads then revert to dial
up speed. It doesn't take much to workout that 6 students paying an
additional $5/week for internet connection, would not only get a
cheaper and faster internet service but the landlord also turns a
profit.
 
7. Paragraph 7 would seem somewhat of a risky strategy allowing the
student to paint their rooms. It assumes that students are capable and
competent painters and that their painting job is not going to do any
harm to surrounding areas such as floors, windows, ceilings, light
fittings, cupboards etc. It also assumes that the colour scheme will
not deter future would be tenants.

8. The last 2 paragraphs are just rounding off.

Therefore based on the information you provided to me, I request you
either research the question appropriately through the internet, or
give the question to someone else to research or refund me my money.

regards


Mark

I have previously requested a refund and did not receive a reply or a
refund. I won't restate my reasons for the request but in essence, I
paid for an internet search and I was given the researchers personal
opinion. In Australia, that response would break the law twice. The
first time it would be in breach of the Trade Practices Act for false
advertising (promising internet searches and providing personal
opinion instead) and secondly providing personal investment advice is
only lawful if you are a licienced investment advisor. So I request
again for a full refund of my money.

Mark, 
Nothing beats hands on experience.
As an investment, there are some other considerations that Tox-ga may
have assumed were apparent.
Where are you?
Managing a rental place for students will require some active
presence, so the place should be within commuting distance.  Sure, an
apartment manager can handle this, but at a price, and maybe not
always to your complete satisfaction.
The economics of the investment will depend on the local rental market
for similar accomodations and the price (and financing) for the
building, plus maintenance, furnishings, etc.  With short term rental,
one usually gets better tenants at the upper end of the market: less
problems collecting rent, more respect for the premises  - but with,
of course, probably a higher initial investment.
The economics of any real estate  - any - investment depend very much
on the price one can eventually sell the property for.  A new branch
of a state university can enhance the locality.  In a settled
environment, one needs to look at the way the immediate area is moving
and what could influence that.
The building should also not be on the fringe of the building code for
rental properties, since the code could be tightened, requiring
unexpected investments.
Back to my original question: where are you?

This is a free comment.
Myoarin

Mark, 
You might read the FAQs.  Other Researchers can only post
Clarifications as long as an "answer" is in place.
Myoarin

mark1962xyz,

As someone who recently graduated college, and lived in several houses
just like you described, I would have to say that tox is dead on with
his recommendations.

Your property managers can say what they want, but I never knew a
student who wanted a fully furnished house.  One house I lived in had
several cheap couches and desks (like you might find at a
thrift-store) stored in the backyard shed that we could use if we
wanted or keep in the shed if we didn't.  If that's possible for you
to do, I'd say that's your best bet, and it's a good selling point, in
case the students want extra furniture.  It costs only a few hundred
dollars to buy several couches and desks, and if they get destroyed,
it's no big deal.

No matter what kind of furntiture you put in the house, you can almost
guarantee that it will be dirty/damaged enough after a year or two
that it would make the house less desirable to potential tenants.

Generally, the only students that would bother taking the time to
paint the rooms would do a pretty good job.  In one house, my
roommates and I tore down the hideous wallpaper, and repainted the
living room.  I can guarantee it made the house more desirable, and it
cost the landlords nothing.  I would say it's a low-risk situation, as
long as you approve any type of project like that.  It's not really a
selling point, so you don't need to advertise it.

Anyway, if you'd rather not accept one person's opinion as an answer,
that's fine, but at least take tox's suggestions to heart, because
they're good ones.