Savvy investors target student accommodation

Carolyn Parrella

Attracting international students as tenants can be a unique and lucrative investment opportunity.

Blogger: Carolyn Parrella, executive manager, Terri Scheer Insurance

Inner-city apartments, in particular those close to universities, public transport and amenities, are highly sought after by international students.

This can present a unique opportunity for property investors with international students driving demand for affordable student accommodation. Landlords will often rent each room in the rental property to a student tenant.

For example, if the property has four bedrooms and you rent each room out for $200, you’re looking at $800 in rental income per week for one investment property.

Attracting international students as tenants can turn into a lucrative investment option for landlords, but it needs to be managed efficiently. There are a number of things to consider when targeting international students as tenants.

Furnishing property

International students travel a long way from home to carry out their university studies and want somewhere to live that is equipped to suit their needs. With this in mind, property investors trying to target the student market should consider furnishing the rental property.

For many students, their home is a place to sleep and study. This means they’ll require a suitable study environment including a desk and good lighting, modern appliances and high speed internet connection.

Apartments or properties with more than one bathroom or an ensuite attached to the bedrooms will provide convenience and likely appeal to a greater pool of potential tenants.

Also, think about bedding with single beds generally the most practical choice for students. Students tend not to have large budgets, therefore décor and furnishings can be kept minimal.

Length of lease agreement

Landlords should carefully consider the length of the lease they offer tenants as international students may only require accommodation during the university calendar year with semester breaks in between. Many international students return to their home country or travel at the end of the year, so the property could be vacant from December until February.

This could mean the property remains untenanted for a period of time and there may be no rental income for a landlord for up to three months a year, so it’s something worth considering in your investment strategy.

Landlords may wish to sublet the property during this time. This should be outlined on the rental agreement and should stipulate that the tenant who is named on the lease will still be responsible for rent and any damage to the property while they are away.

Clear rental agreement and insurance policy

The rental agreement has to clearly state all inclusions and set out how disputes relating to those inclusions will be resolved. For instance, if utilities such as water, gas and electricity bills are included as part of the agreed rental price, it should be outlined on the rental agreement.

Landlords have a number of options when it comes to drawing up a rental agreement for student accommodation.

A landlord may rent out each bedroom in their property with separate leases and insurance policies while the students share the common area.

Alternatively, a landlord may rent the property as one rental with multiple students on the same lease. This means there’s one lease and one insurance policy, and that all tenants are responsible for paying rent and are named on the lease. In the event that damage occurs in the common area, for instance the kitchen or living space, there’s no confusion over the resolution process.

Damage can be costly for landlords if they do not have adequate insurance to cover replacement costs. Even the best tenant can accidentally damage the property or suffer financial hardship.

A standard home and contents insurance policy may not cover landlords for these particular risks.

A specifically designed landlord insurance policy could help to ensure you are not left out of pocket should these unforeseen events occur.

Read more: 

8 suburbs recording 30%-plus growth 

Should I invest in the outer suburbs? 

5 tips to attract the right homebuyers 

Carolyn Parrella

Carolyn Parrella

Carolyn Parrella is Executive Manager of Australia’s leading landlord insurance specialists, Terri Scheer Insurance. Terri Scheer provides insurance cover for landlords, helping to protect them against the risks associated with owning a rental property. These include malicious damage by tenants, accidental damage, landlord’s legal liability and loss of rental income. 

Savvy investors target student accommodation
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