Everything you need to know about Student Rentals
I get asked all the time by many new investors – should I buy a student rental?
My answer is always the same, well, it depends – man, do I ever sound like a lawyer.
Student rentals are not for everyone and many investors see the cash flow numbers and get sucked in by that. However, they can be a great addition to your portfolio!
The student lease cycle typically runs from May 1 to April 30, so many investors begin their search early in January in hopes of closing on a property around the timing of the new cycle.
Those considering a student rental in Hamilton or Niagara don’t necessarily need to be a large investor. Often times parents purchase a home for their child as an investment while they attend post-secondary education, with the child then renting out the remaining rooms to friends to cover costs. As an investment, the goal is over the time the student lives there, the property will appreciate in value and the parent would then sell when the residence is no longer needed. Or, hold onto the property as another means of producing income.
There are many metrics used by investors to determine the investment value of a home and determine if the asking price is reasonable. But in the end, the true way to understand if a home is a good investment is to ensure that it cashflows (brings in more money in rent than it costs to own) out of the gate.
Finding a property that cashflows can be challenging in these markets, although these properties do still exist. The challenge is that as prices of Hamilton & Niagara region homes have increased significantly, to the point that the market rent is not enough to cover the expenses to own it. Landlords are often forced to decide – either lose money every month, look to another city with stronger rental financials or find an alternative investment outside of real estate.
Generally, students will get a few friends to move in together and split the rent. The going rate per room can anywhere between $450 to $650 per month, with some exceptions. Some landlords will require the tenants to pay utilities and sometimes they are included.
If you live outside of the area and are considering a student rental property, ensure that you have a plan in place for yard maintenance, snow removal and general upkeep. This could be with the tenant, or with a property management company.
It’s wise to work with a real estate agent who understands the legalities and by-laws of student rentals to be sure the property you are considering is compliant with the City.
Like any investment decision, ensure you do your proper due diligence and make the right decision that suits your individual needs.
Interested in acquiring a student rental property? Welcome Home Management can help you on both the sales and management side of the transaction.
Interested in learning more? Feel free to reach out and see if we might be a fit.