James Maggs is the team lead of the iWin Real Estate Team and has been an investor in many different strategies since 2009. One of those strategies being Student Rental investing!
With September rapidly approaching, we thought it would be a good idea to touch on what we are seeing with the Student Rental market these days, especially with all the Covid-19 changes being implemented by many schools.
Most leases for Post-Secondary run from May thru April of the following year, but due to Covid, many of the move inâ€™s for May didnâ€™t take place this year – even though the leases started, and rent collection happened as well! This means we are likely to see many students move in end of August.
Now, depending on where your student rental is, those students might not actually be going to class on campus this year!
McMaster University in Hamilton for instance, has gone to 100% remote learning for the Fall Semester (Sept thru December).
This does not mean that investors have houses sitting empty!
While some investors offered their students a small discount to keep their leases through the summer, most students have been paying full rent since May – even for empty rooms.
In talking to many of our student rental investors, as well as Student Rental property managers who are managing hundreds of properties, they have shared that for the most part things are running business as usual.
This makes perfect sense, as for many students, the last thing they want to worry about while focusing on their studies is to have their parents bugging them to clean their room, or not to stay up so late 😉
Students still want the University or College experience, so for most of them, they want to be on their own, learning how to manage without Mom and Dad.
We have seen a small increase in vacancy, but these are for the most part in the less desirable units further from campus or in rougher condition.
So for those of you looking to get into the Student Rental Market, this is still a good time!
Some investors have chosen to sell (for various reasons), so there are great opportunities out there, especially compared to the frenzy we are seeing in the single family and multi family markets.
Right now, Student rental investing gives you the opportunity to worry less about competition, and often gives you the ability to negotiate better prices!
Student Rental Numbers
To give you an idea on why Student Rentals can be a great investment, letâ€™s walk through an example:
Purchase Price of a turn-key 7 bedroom Student Rental: approximately 600k
Market Rents: 500/rm or 3500/month for the whole house
Mortgage: $2025/month (3% interest/30 year amortization)
Property Taxes: $375/month
Utilities (paid by owner): $350/month
Total Expenses: $2875/month
Net Cashflow after Expenses: $625/month
Now, this is just a rough example, but something like this is very common to find in the various markets around the more popular schools (ie. Mcmaster/Brock/Waterloo/Western)
As you can see, Student Rentals are still a great investment opportunity, with high cashflow, and almost next to no vacancy due to the limited supply of residence housing, and the large demand for private investors to provide housing to the upper year students!
If youâ€™re interested in learning more about how you can invest in Student Rentals, click below to sign up for our Free iWin Launch program.
**Calculations are approximations. Buyer to do their own due diligence and not rely on the accuracy of the calculations above.