Depositing your hard-earned cash in a bank is one of the safest ways to save up for the future. That being said, the interest rate for saving accounts or other banking investments is low and buying stocks or mutual funds is risky since they are not covered by insurance companies. If you want to see your money grow passively then one of the best options available now is student housing.
Understanding Student Housing Accommodations
Before you invest on accommodations purposely built for students, it is important to understand the hidden risks as well as benefits in order to prevent any future problems. Student housing includes “pods” or “studio” suites built near universities or colleges in a city. These buildings often have their own gym, restaurants and other amenities.
Some buildings are built like a mini-hotel, thus, also come complete with a concierge and just about any amenities that a hotel had. Investors who are interested can buy a single pod or more depending on how many they are interested in. The management of the pods are usually handled by a third-party team, that is – from finding students to lease the rooms, collecting rents and paying out the investor.
Benefits and Risks
One of the benefits of owning these types of accommodation is that the potential to earn more is higher compared to just saving through the banks. Another is that since a management team is responsible for finding occupants for the pods and maintaining the property, investors no longer have to worry about the responsibility and just wait for the rental fees to be paid out to them.
That being said, there are some hidden risks that an investor has to also consider and one of them is the possibility of mismanagement. Fees for property management are also deducted from the rental reducing the total income. Finding tenants might also be hard especially during off-season or when schools are closed.
Should you invest in a Student Housing?
Before you invest on real estate property specifically for students, it is important to know the ins and outs of the industry. Do you have enough cash to purchase one pod or do you need to apply for a mortgage loan? As with other real estate properties such as condos, these pods are sold “off-plan” meaning that they are being sold before they are complete. How is your risk level? Are you comfortable having someone fully manage your property? Answering these questions honestly will give you a clear view of what you are comfortable with and in the likely event that you are interested but want to learn more, then you can talk with a financial investor to help you find the best way that you can invest on student housing accommodation.