When you invest in PBSA (purpose-built student accommodation) you will derive your returns through rental income and the potential for capital growth when you decide to sell. Currently there are some developers who offer guaranteed yields of 7 to 9% for the first five years and, whilst this is very attractive, it pays to do your due diligence to ensure that the developer has a strong track record of success and that the development is a viable one.
The vast majority of PBSA have management companies that look after maintenance, handling tenant queries etc so management charges need to be factored into the rental income you receive.
You are not able to obtain a mortgage for purchasing student property so the investment will need to be funded separately, usually involving an initial deposit, followed by the remaining payment on completion.
Students tend to rent accommodation on an annual basis so the timing of the development completion may impact on how swiftly an investor will start enjoying rental income, especially if there is no rental guarantee in place.
Student property is seen as a highly attractive investment proposition for a number of reasons. Here are the main ones:
- A large and ever-increasing student market
- A relatively low cost of entry with investments typically ranging from £50K to £100K
- Guaranteed rental returns for five years
- Hassle-free, hands-off investment because all the maintenance is handled by the management company
- Good potential for capital growth when you are ready to sell
Interested in finding out more about student property investments? Contact us now on 0333 3001 888.