Join Australia's most dynamic and respected property investment community

Any Student Accomodation building owners/operators?

Discussion in 'Commercial Property' started by klabat, 18th Nov, 2015.

  1. klabat

    klabat Well-Known Member

    4th Jul, 2015
    Would like to know if there are any owners of commercially built Student Accommodation or operators.

    Would like to know your experience on how about the development process was?
    Finance issues with such commercial build?
    What university and area, vacancy rates?
    Influx and increase of International students and tenancy mix to rent helped?

    Currently have a block close to a major university and thinking of turning it into a student accommodation than a residential development

    Any help and advice would be grateful
    Last edited: 18th Nov, 2015
  2. Tam Thorogood

    Tam Thorogood Member

    14th Apr, 2016
  3. Xiao Hui

    Xiao Hui Well-Known Member

    12th Dec, 2015
    I own a students accommodation in a regional town in vic. It has 30 plus rooms, 3 kitchens and numerous bathrooms and toilets.

    Having operated for close to 3 years now, I think it is tougher than I have initially thought.

    The 2 main issues revolving around this business is the high costs of operation as well as the uncertainty in getting students.

    Every month I have to contend with paying numerous bills like water, power, gas, cleaning materials etc. Bills are high as students often make no effort to save on these. Worse, things constantly breakdown in the rooms or common areas, resulting in expensive repairs almost monthly. Many of these repairs are due to poor handling by the students. To earn a profit therefore, try to keep above costs low as possible. Know the rates you're paying (will it increase if you convert to a students accommodation?) and factor in all the possible costs associated with its running. Will you be doing the cleaning? Will you need to engage someone to oversee it when you're on holiday? Also factor in say a 10% of your net profit every month for repairs - this will happen.

    Another issue is getting enough students to fill the place. Check out the demand supply ratio in this vicinity and what's the going rental rate like. Do they pay rent only on their school term of 10 months or do they pay a full 12 months? What type of students are you targeting, locals or foreigners? The latter tend to be better in discipline and rent payment from my experience. How confident are you in filling all, if not most the rooms? If you cannot have at least 80% occupancy rate, then forget it. It's not worth doing. Not to forget, if you have thought of converting your house to a students place, others might have thought of this too. So supply could be a lot more than you imagine. Not to mention the numerous Airbnb that have pop up all over the place these few years.

    Essentially, running a students accommodation should reap you substantially much more net profit than if you rent the house to a family - 70% to 100% more in my opinion. If not, save the trouble. It's more exhausting and pressurising than many people thought.
    Brisbane04, Beano, Gockie and 3 others like this.