Welcome to this information page for investors who are considering investing in student accommodation.
Below, we explain exactly what this type of investment entails, what its advantages are, why you should opt for student accommodation as a buy-to-let property, what the risks and returns are and why this type of buy-to-let property remains sought after in the future.
We also made a list of useful tips that you can use when making your investment decision.
Finally, you will get an overview of various projects with student accommodation for sale as investment.
Table of Contents
- 1 What exactly is investing in student accommodation?
- 2 Advantages of investing in student accommodation
- 3 Why investing in student accommodation?
- 4 Risks & rewards of investing in student accommodation
- 4.1 Dangers of investing in student accommodation
- 4.1.1 Bankruptcy of the project developer
- 4.1.2 Bankruptcy of the operator or poor service
- 4.1.3 Rental income may decrease after the guaranteed period ends
- 4.1.4 The number of students & the demand for student rooms might decrease
- 4.1.5 Local competition
- 4.1.6 The location may not be the best
- 4.1.7 Delayed delivery
- 4.1.8 The costs may have been incorrectly budgeted
- 4.2 Income from investing in student accommodation
- 4.1 Dangers of investing in student accommodation
- 5 Tips for investing in student accommodation
- 6 Offer | Investing in student accommodation
- 7 Other opportunities in investment property with guarantees
What exactly is investing in student accommodation?
One of the most popular methods of investing in student accommodation is by purchasing one or more student rooms.
These are often purchased in a specific student accommodation building and then managed by a professional operator.
This means that such investments guarantee passive income and much less headaches compared to student rooms that you have to rent out yourself.
If the student accommodation in question has good figures for occupancy and income, the resale value of such a student room is at least as high as its purchase value.
Advantages of investing in student accommodation
Some investments offer a guaranteed return for a certain period of time. This then provides the investors in question with secure and stable rental income.
Such rental guarantees are offered by some developers of student accommodation.
Here, the property developer undertakes to pay out annual rental income, even if your student room is not actually rented out.
We also call this the silver rent guarantee.
Increase in annual rental income
The market for student accommodation in the large student cities is characterised by high occupancy rates. Therefore, it is safe to assume that rental income will increase in the future.
Annual indexation also plays a role in increasing rental income (the adjustment of the rent to the cost of living).
Rising rental income provides investors with opportunities to sell their student room(s) at a higher price than the original purchase price.
Thus, there is also a possible added value as an additional return component (in addition to the annual rental income as a basic component of the return).
Passive, hands-free investment
A specialised company with experience is responsible for operating the accommodation. This company takes care of the maintenance and daily management of your student room(s).
As a result, investors can rest assured that everything is running smoothly. Moreover, you do not have to deal with time-consuming activities such as carrying out repairs and finding tenants.
Outsourcing buy-to-let property management [AVAILABLE SOON] is perfect for earning passive income from real estate [AVAILABLE SOON].
The student market in which people buy to let is a mature and developed investment market [AVAILABLE SOON]. As a result, this market offers a robust revenue stream over the long term and is also low risk.
To maximise the income from such an investment, you also need to consider the long term. As an investor, you should therefore give priority to student accommodation with the following characteristics:
- High-quality projects and student rooms (cheap is expensive!)
- Good location close to higher education institutions and/or the city centre
In most cases, you are 100 per cent owner of the student room(s).
You will then have a deed of sale and a notarial deed, so you can always decide to sell your yield property again.
Why investing in student accommodation?
Some advantages of buying a student flat as an investment [AVAILABLE SOON] are the following:
- Low entry costs compared to the housing market in which one buys property to let
- Fully managed by a professional and experienced operator
- High occupancy rates
- Annual returns are often higher than those of traditional markets where people buy to let
- Passive income [AVAILABLE SOON] guaranteed for a predetermined period
Risks & rewards of investing in student accommodation
If you are about to invest in something, you should always have a good idea of the risks and returns of the investment.
It is often assumed that the higher the returns, the higher the risk of the investment.
However, if you do your homework and thoroughly research the opportunity and compare it with other options, this is not always the case.
If you’re interested in investing in student accommodation, it is important to know everything about the investment you are considering.
Only then can you make an informed decision and correctly evaluate the risks and returns of student accommodation as an investment [AVAILABLE SOON] .
Dangers of investing in student accommodation
Bankruptcy of the project developer
There is an increasing number of property developers seeking funding from private investors for student accommodation projects. Often, a specific business model is used that has been successful in the past.
Funds are raised from investors and then used for the construction of the project.
Investors are rewarded with higher returns than those of savings books and traditional markets where people buy to let.
Therefore, the project developer should not advance the whole project with his own funds. This ensures that the developer has more financial breathing space in terms of cash flow. And this ensures that the chances of the project developer going bankrupt are minimal.
In the most extreme case, the bankruptcy of the project developer, a new construction promoter can always be appointed to take care of the construction of the project.
In fact, the construction has already been financed and the funds have already been raised and blocked in special accounts.
Bankruptcy of the operator or poor service
Do your homework and invest in a project only if the operator in question has a lot of experience and a stable and good reputation.
In this way, you minimise the risk of the professional operator providing a poor service or the business going bust.
You can also always consult the balance sheet and profit and loss account of this company via the national database (if available) to analyse the financial health of this company!
If you were to be investing in student accommodation in a project where you are entitled to a guaranteed rental income for x number of years, then the project developer will take responsibility if the operator goes bankrupt.
Rental income may decrease after the guaranteed period ends
You can find out a lot by looking at the prices of other student rooms on the private market. Also check the prices of accommodation managed by higher education institutions.
By making this local analysis, you can get a good idea of the pricing in the sector and how these prices will evolve in the future.
Keep in mind that you can always look for projects where you as an owner are entitled to guaranteed rental income during a certain period of time.
By choosing such an investment, you can fully insure and guarantee your return on investment to a certain extent.
Moreover, there is also an underlying reason behind such a project, which offers guaranteed rental income for say three to five years…
A smart investor understands that this means that the market will remain stable at rents that are even higher than the current applicable prices.
Traditionally, rent prices rise with inflation and other factors that influence the price upwards, such as a rising demand for student rooms.
The number of students & the demand for student rooms might decrease
A decrease in the number of students is a real threat to those who plan on investing in student accommodation.
However, the fourth industrial revolution, also known as the digital revolution, means that knowledge is more important than ever.
Millions of jobs are at stake worldwide due to rapidly increasing digitalisation and robotisation. You can see this as a threat but also as an opportunity.
The knowledge economy is more important than ever and young school leavers are well aware that without the necessary qualifications they will not get a job. This evolution increases the number of students and consequently the demand for student rooms.
However, it is wise not to blindly go about investing in student accommodation of a certain project. It is wise to verify the demand for student rooms.
You can contact a few existing residences in the same area by phone to check availability for next year. If there are waiting lists or everything is full, then you have a clear signal!
Successful new-build projects with student accommodation are built in locations where demand exceeds supply.
Competition in the neighbourhood is not necessarily a bad thing. It offers you the chance to invest in a project that makes a difference in terms of service, quality and cleanliness.
A good operator with a professional rental service [AVAILABLE SOON] specialises in attracting students. The services of a professional management company ensure that the building is maintained according to the rules of the art.
A building with student rooms should be fresh, clean and maintained, regardless of how long it has been used.
Existing student residences that are well maintained and located will always attract tenants.
The location may not be the best
The closer a project is to universities and colleges, the faster it will reach an optimal occupancy rate of 100 per cent.
In fact, there is a negative correlation between the occupancy rate and the distance between the accommodation and higher education institutions.
In other words, the greater the distance between the accommodation and the educational institutions, the lower the occupancy rate. Keep this in mind when investing in student accommodation!
If there are other residences at the same location, pricing will also play a role, regardless of the location. In such a case, the facilities available will also play their part in attracting students.
In extreme cases, force majeure such as long periods of freezing temperatures, storms or extreme heat.
Sometimes there are also external factors (such as a supplier suffering from strikes) that can cause delays.
If you are thinking of investing in student accommodation, you can counteract the risks of delayed delivery in three ways:
- If you invest in a project with guaranteed rental income (with a rental guarantee), it often does not matter. Whether the project is completed or not, as an investor you are entitled to your rental income. The delay is then a problem for the project developer.
- Try to estimate the project developer. Is it a professional company with experience in the sector? If this is the case, chances are that they work with solid internal reporting systems to solve delays. Avoid investing in projects launched by companies that are still green behind the ears. And preferably select a developer who owns and manages [AVAILABLE SOON] the property himself.
- You can also assess the risks yourself by checking which subcontractors the project developer works with. Are we talking about companies with a good reputation or rather shady subcontractors with no clear track record? Only in the first case should you take the plunge as an investor. Stay away from projects using rogue subcontractors.
The costs may have been incorrectly budgeted
Successful projects are supported by very detailed budgeting of construction and management costs.
Such professional budgeting enables project developers to guarantee investors income.
Apart from budgeting, you should also ask whether the construction promoter in question also actively calculates costs.
Are costs constantly monitored and what about outgoing payments of invoices? A project developer who is quick on the ball is your preference!
As an investor, you should also check whether the student rooms in question are correctly priced. Compare with prices of similar student accommodation projects in the region, for example.
Also check whether the final cost of such a student room effectively covers everything.
In other words, check that there are no hidden costs, such as additional costs for building supervision.
Income from investing in student accommodation
Apart from the risks, there are of course returns (the reward for taking the risk) associated with investing in student accommodation:
- Student accommodations in which an investor buys one or more student rooms to rent out are not new. This model has been around for a long time and its effectiveness has been proven many times.
- Appreciation potential as property prices continue to climb.
- Sustainable market with growth potential due to the knowledge economy.
- In some cases, guaranteed income through a rental guarantee.
- Higher yields than a conventional bank savings account.
- Hands-free passive real estate investment [AVAILABLE SOON] without too much time loss and headaches.
Tips for investing in student accommodation
If you are planning on investing in student accommodation, be sure to consider the following list of tips.
This will equip you to make a successful investment.
Some tips, by the way, are applicable to anyone who wants to invest money in real estate [AVAILABLE SOON]:
A project located close to shopping and entertainment facilities is an attractive one for investors. The proximity of public transport is an additional advantage.
An example of a residence blessed with a prime location in Leuven, the Flemish student city in Belgium, can be seen on the offer Investing in student rooms in Leuven [AVAILABLE SOON].
Here you can invest in beautiful student accommodation at a top location!
This does not mean that as an investor you should automatically write off all projects that are not close to the city centre.
A project with a slightly lesser location can compensate for this disadvantage with better facilities, extra services and larger and higher-quality student rooms.
The developer and the operator can also make a difference in terms of quality and service!
Do not lose sight of the fact that the prices of student rooms in residences outside the city centre are somewhat lower.
These lower rents are attractive to certain types of students who, for example, like to cycle or travel by public transport.
A location outside the city centre is therefore not necessarily a bad thing! The attractiveness of such an investment depends on many other factors too!
Investing in a region where there is a shortage of student rooms ensures high occupancy rates and stable returns in the medium to long term.
When researching the demand for student rooms, there are several factors to consider.
Examine the expansion plans of the present higher education institutions (universities and colleges). These plans are a good indication of the evolution of the demand for student rooms.
A higher education institution that is planning or building new facilities is going for expansion. And this expansion is accompanied by a rising demand for student accommodation.
Also check out the local offer of private student accommodation (student dorms in converted houses, for example).
An ideal project for investing in student accommodation is one where there are not many private student accommodations in the vicinity.
These private student rooms are in fact quite competitively priced (but this then often translates into rooms that are not up to standard).
The yield profile of an investment always determines whether this investment is a good investment. So, as an investor, you should always find out whether the projected returns of the investment are actually achievable.
So doing your personal research in today’s student accommodation market is simply essential for smart investing in student accommodation. You should also find out what other residences in the area charge in terms of rent.
The income profile of your potential investment (a student room) should be based on the current rental prices in the region.
Only in this way can you be sure that the projected return [AVAILABLE SOON] is realistic and sustainable. And only in such a case can you be investing in student accommodation with peace of mind.
You can also investigate what the neighbouring educational institutions charge for their accommodations.
Traditionally, these accommodations have been heavily subsidised and therefore have lower rental prices compared to student rooms in the private sector.
As an investor, you prefer projects that align their rents with such pricing of educational institutions located nearby.
These projects will find it easier to achieve the optimal occupancy rate of 100 per cent compared to projects that link their rents to private rents.
If the rental prices of your potential investment project are based on the prices in the private rental market, take a detailed look at the profile of the operator.
Higher rental prices may make sense if the track record and reputation of the operator points to high performance!
Interested in investing in student accommodation? Then it is in your interest that the building with the student rooms is operated by a professional company that offers a very good service package [AVAILABLE SOON].
The operator must maintain the building to the highest standards and must also be effective without wasting money. A difficult balancing act!
A party with experience and a good reputation is necessary! As an investor, do not go with amateurs or parties without experience.
All management and operating costs are deducted from the rent received, so you should take this into account before investing in student accommodation!
Investigate whether the operator’s remuneration is in line with the market and not excessive.
- Only consider projects for which all building plans and building applications have been approved. This way you avoid uncertainty in construction and development when investing in student accommodation.
- See if the necessary legal contracts are used to build up the necessary legal protection as an investor. For example, a sales contract and a notarial deed. Defensive investment in real estate [AVAILABLE SOON] is important!
- Try to gather some information from existing investors who have already invested in one of the projects of the parties behind the current project. Often you will find out many things that you would otherwise never be able to find out! A thorough due diligence [AVAILABLE SOON] is worth its weight in gold.
Offer | Investing in student accommodation
Are you interested in investing in student accommodation?
Then be sure to check out the following investment opportunities in student accommodation:
Leuven student rooms as an investment in Belgium
- Student room for sale in Leuven city centre [AVAILABLE SOON]: Ready-to-move-in residential units as an investment (or for your student child), from 55,000 euros minimum own contribution
- Student rooms for sale in Leuven [AVAILABLE SOON] – Interesting real estate investment 500 metres from the ring road, with spacious private garden and private bathroom for every room
- Student flats in Leuven for sale [AVAILABLE SOON] – Furnished units on top location (interesting investment)
- Student accommodation for sale in Leuven [AVAILABLE SOON] – For studying children or for real estate investors who want a guaranteed return
- Luxurious studios for sale in Leuven [AVAILABLE SOON] – Top location, in full ownership, with carefree rental formula and guaranteed rental income
- For bigger budgets: Student accommodation in Leuven for sale [AVAILABLE SOON] in its entirety including 5 rental units with volume discount for the whole
- Invest in student rooms in Leuven [AVAILABLE SOON] – Rental guarantee included!
- Buy condo in Leuven [AVAILABLE SOON] – With 5-year savings plan like cash voucher
- Buy a studio in student city Leuven [AVAILABLE SOON] – Carefree investment in student accommodation
Antwerp student rooms as an investment in Belgium
- Student room for sale in Antwerp [AVAILABLE SOON] close to The Zuid with private bathroom & kitchen, from 58 000 euro contribution you will acquire full ownership (top location)
- If you are looking for a larger buy-to-let property, the following offer is more interesting:
- Student accommodation for sale in Antwerp [AVAILABLE SOON] close to The Zuid, the Scheldt quays & the Zuiderdokken, from a minimum equity contribution of 300 000 euro, unique opportunity with appreciation potential
Or are you not entirely convinced that student rooms are the ideal form of investment property for you?
Then we recommend you also take a look at the ready-made investment properties [AVAILABLE SOON] below.
Investing in real estate [AVAILABLE SOON] can be done in various ways.
Think carefully about the question of active or passive investment in real estate [AVAILABLE SOON]!
Other opportunities in investment property with guarantees
Investing in real estate with rental guarantee [AVAILABLE SOON] is a good idea if you are looking for guaranteed rental income.
Such guarantees vary enormously and can be roughly divided into three types:
- Buy a second home in France with a guaranteed return of up to 8% per year and 2 weeks free private use per year. Bonus return: resale at minimum 125% or 150% of the original purchase value after 5 or 10 years respectively.
- Recreational real estate in France as a carefree investment with guaranteed return - you can invest as little as 17 230 Euros, with up to 8% annual return. No free private use but at favourable rate. Bonus return: resale at minimum 125% or 150% of original purchase price after 5 or 10 years respectively.
- Buy a second home on the island of Samos, with free weeks of personal use and contractually guaranteed returns
- Buy a flat on the Costa del Sol [AVAILABLE SOON] including a carefree rental service and returns
- German real estate as investment with security of tenure and low entry costs, including trustee and steward
- Buy-to-let property in Brussels in Woluwe, a real top location that allows for a value-adding real estate investment. Passive investment with 5-6% return if you partly finance with a loan
- Buy a new flat in Brussels [AVAILABLE SOON] in Evere as a passive investment with rental service from A to Z, as from 85 000 Euros own contribution with an annual return of +/- 5,5% (passive investment in Brussels real estate is possible here)
- Invest in Swedish family homes for rent [AVAILABLE SOON] on a beautiful plot of land and with attractive potential gross annual returns
- Buy luxury property in Montenegro with magnificent views and free 6 weeks of private use per year, including rental service by the resort with promising annual returns. 100% personal use is also possible.