Investing in student accommodation

fittoburst

Hi just looking for advice or feedback from anyone who has invested in student villages? I am considering whether or not to buy a unit. I know that the section 50 relief no longer applies so I would just be receiving the annual rent of approx 4k per year. It seems like a good idea for an apartment costing about 50k and it certainly pays more than a bank would on deposit. Any advice welcome, Thanks

newacc2015

They are the safest rental investments in Ireland. They are exempt from normal tenancy laws if they are an approved student accommodation unit. ie you can evict a non-payment tenant immediately without legal recourse.

The only big issue with student accommodation is that the management fees can be extortion. I know of a student complex in Dublin, where the management company is the letting agent. They take about 25% of the rent in letting fees and management fees.

fittoburst

The villages I'm looking into are outside Dublin (Sligo/Limerick/Waterford/Carlow) and the price per apartment is around the 50k bracket. The estate agents have quoted net annual rents at around 4k and that's after all management fees/maintenance etc so it is completely hands-off investment. I'm just wondering what if any, are the pitfalls. I'm told that when originally built these units would have been sold around the 200k mark so to get one now for 50k seems a good deal. I wonder is there anything else I could invest 50k in? This is a first for me so I'm trying to weigh up all the options before proceeding with caution.

Sonnenblumen

€ 4k pa for a € 50k unit seems like a very good return but for a € 200k unit miserly. I wonder what contract if any they offer owners 1 year rolling contract ?

Good luck

fittoburst

I am not sure about contracts. As far as I understand it, I'd buy the unit but the management company take it over completely and organise the letting, repairs, etc. It is purely for students use and I wouldn't be allowed to stay in it or rent it out myself to someone else. The management company let it out for 9 months of the academic year and also let it out during summer months to tourists. All the rent in the complex is pooled and shared out among the owners (less all costs and fees) and still comes to about 4k per year. I agree it seems like a good return for a 50k investment. Just wondering if it's too good to be true?

Nody

The thing you need to keep in mind is maintenance; students are not exactly renown for going easy on a place...

Sonnenblumen

fittoburst wrote: »

I am not sure about contracts. As far as I understand it, I'd buy the unit but the management company take it over completely and organise the letting, repairs, etc. It is purely for students use and I wouldn't be allowed to stay in it or rent it out myself to someone else. The management company let it out for 9 months of the academic year and also let it out during summer months to tourists. All the rent in the complex is pooled and shared out among the owners (less all costs and fees) and still comes to about 4k per year. I agree it seems like a good return for a 50k investment. Just wondering if it's too good to be true?

I would not be too keen on the pooling, no incentive for individual landlords to keep property up to standard, also Nody makes a valid point about students I think it better if the landlord had more control of individual units and still pay man fees etc. Unless the man co can guarantee rental income, I'd probably stay clear?