Student Accommodation. A good investment opportunity?

[Charlie123]

My first post. I am considering my first buy to let and doing some initial research. I have come across companies offering ‘student accommodation’ investment opportunities near universities. At a very modest investment starting around £50k. The returns are around 9 to 10% net with guaranteed rental income with a fully managed service. No worries about tenants etc…

This sounds very tempting. Has any body looked into these and I would appreciate any advice and comments. Getting a loan will be a problem but except for this it sounds very tempting. Thank you

[richardpowel]

Hi there,

Just would like to give you some personal opinion. Student accommodations are a good form of investment but is closely associated with the students registering with the university which is normally affected by the UKBA norms which keeps changing every year. Now since the property is in the vicinity of the uni it becomes difficult to sell these properties if you have to in the future. Maintenance costs are also involved when it comes to student properties unless you can directly tie up with the uni which is very unlikely. Think twice before making your move.

[hech123]

if its one of them investment sites online beware, most are a complete con. look up fresh start living and add the work rip off or something, there are many dangerous sites looking to fleece investors.

[hech123]

http://www.ripoffreport.com/property...tart-dbaf9.htm just one of the companies selling these, many reports, many horror stories

[JamesHopeful]

I don't know the details but this type of investment makes me instinctively very queasy:

• the schemes are often very heavily advertised, which always implies there's more in it for the advertiser than there is for you;
• it's very intangible - as far as I am aware you don't get to be a Land Registry registered owner, so really you barely have any idea where your money's gone -- a bit like buying shares rather than property, but without even the investor safeguards which shares provide;
• student accommodation is highly specialised type of building which increases your risk considerably -- the local university only has to lose its reputation a bit or become less popular, and the value of the investment might have crashed -- the flats are very difficult to convert into family accommodation for various reasons;
• only other investors will buy your stake if you want to get out - with normal property it might be first time buyers, upsizers, downsizers, anyone really (as well as other investors) - obviously it's better to have a bigger pool of potential buyers;
• why can't the company which is selling this have financed the project with a much cheaper bank loan? If the banks won't lend on it, why not? I imagine they have their reasons....

All in all, I'd be much happier with a traditional buy-to-let house/flat (which may be rented out to students, or may not).

[Charlie123]

Thank you all for your comments. I get a weekly email from Landlordzone ( this very site) and they are advertising these students lets. They are promoting a company called knightknox. website is www.knightknox.com

[barns30]

Ive seen a lot of these. Im very sceptical. As others have said, why would they need to advertise if they were offering that? I think its entirely possible to make agreat deal of money in student accomodation, but I think you are much better off going with a few other investors, forming a LTD company and pooling to buy several in 2/3 towns - Indeed, I know someone looking at doing this, please message me for an introuction. Unlike most people, the person leading this has some experience in Investment Property, is young, motivated, hugely driven, with good commercial experience (Masters from Imperial), and will be investing significant chunks of his own money...

[Alexlandlord]

I share concerns of fellow posters, schemes may well work, however buying cheap terrace house in vicinity is probably better long term bet provided you pay a sensible price for properties.

Heavily promoted BTL schemes cost people a lot of money last time round, hope fully people will not make the same mistakes again !

Beware

[Phlash]

If you want to invest in student housing talk to your target area letting agents who specialise in student Lettings - do not speak to Estate Agents.

I have had to advise many would be buyers to stop in their tracks - Remember Estate Agents want to sell and they have no interest in identifying barriers to your investment.

We have had a number of investors speak to us prior to an investment purchase and this always works out well - I have no doubt that other student letting agents in other cities hold similar knowledge of the local area to advise new investors accordingly.

You can get better returns yourself and still have it fully managed than paying £40-£60k per room for the types of investment discussed here.