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Article by Adrian Goslett - RE/MAX 13 Jan 2011

Student Accommodation Offers Healthy Investment Returns

Privately owned off-campus student accommodation is in high demand. This is according to Adrian Goslett, CEO of RE/MAX of Southern Africa, who says that statistics have shown a consistently healthy return on investment over the years.

Units with good security within walking distance of the campus and other amenities such as shops and entertainment are especially popular among South African students and parents alike. “Parents will always go to some lengths to ensure their children get the best possible education. Hence, student accommodation will always be in growing demand, which in turn will keep rentals steady with full occupancy for at least 11 months of the year,” notes Goslett.

Property owners will appreciate the fact that tertiary institutions often assist landlords to find tenants through free property listings handed out to students who cannot be accommodated on-campus. “Some universities have 40-page waiting lists. As such, vacancies are rarely a problem, especially because students tend to rent the same unit for a number of years,” he says.

Goslett offers the following advice to property owners who want to rent out student accommodation:

“Start advertising student accommodation from September onwards as this is the time of year parents normally start looking for accommodation for their children for the next academic year,” notes Goslett.

In addition, he advises property owners to apply the same risk management principles that apply to other rental properties. “These include coming to an agreement on what is regarded as acceptable tenant behaviour, signing a legally valid lease agreement, securing a deposit and agreeing on breakage costs to be paid in addition to the deposit,” says Goslett.

Inspecting the property on a regular basis at a time that suits the tenant and the timeous collection of rentals as well as levies, rates and taxes each month are also important,” he says. Goslett adds that property owners can also consider appointing a professional rental management agent, which is, as with other rentals, considered a cost-effective and efficient solution to managing a rental property.

Parents who need accommodation for two or more children at a tertiary institution could consider an investment in a well-located unit, with two or three other students renting rooms in the unit and thus contributing to the bond repayments. “By the time all the children in the family have completed their studies, the unit may well have appreciated significantly in value, and could be sold for a solid return on investment, or held as an investment providing an ongoing annuity income for the future,” he concludes.

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