Real Estate Investor Magazine South Africa February/March 2019 | Page 26

FINDING
Investing in Buy-to-let
student accommodation
What you need to know to invest
BY EDITORIAL
M
ore than 70,000 South Africans are starting university
this year (excluding UNISA correspondent students).
The lucky ones are able to commute from home or
have found places in university residences or have already sorted
a year’s lease on digs but the rest are still hunting for accommo-
dation before orientation weeks begin later this month.
The demand for student accommodation has risen steeply
and universities are unable to meet the demand via student
residences. This has opened up a profitable niche in the real
estate sector for buyers who purchase solely to let to the student
market. We look at some of the advantages of buying-to-let
market.
In 2017, UCT recorded having 28 185 students (with 6 753
living in the residence system). Around 4 200 new first-years
are accepted to study at UCT every year. This high demand for
student accommodation in and around the Southern suburbs
has created a unique opportunity for student accommodation
to satisfy the current undersupply that exists. Safe, convenient
accommodation that is close to amenities is first prize for
students and young professionals.
Online is the best place to start looking. Gumtree SA has
more than 1200 listings across the country specific to student
accommodation and plenty more that could be relevant for this
market. Claire Cobbledick, GM-Director of Gumtree SA, has
some tips to make the search easier.
Understand student needs
• Research the most popular student areas for your varsity and
narrow your search to those suburbs.
• Find some other people from your varsity who are also still
looking and join forces – it’s often easier to find a whole
property for rent than it is a single room.
• Use price comparisons to establish fair value but understand
that Cape Town, Stellenbosch and Pretoria are always going
to be more expensive than P.E. or Pietermaritzburg.
• Make sure you know exactly what’s included in the monthly
rental (electricity, water, wi-fi, security etc.) so you can
compare prices properly.
• Understand the full cost picture - a cheaper rental far away
from campus might cost you more in the long run because of
greater transport costs, and you’ll find it harder to participate
in varsity activities.
• Always inspect the property and check the lease thoroughly
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FEBRUARY/MARCH 2019 SA Real Estate Investor Magazine
(including which services are included) before signing.
• Don’t act out of desperation – if you can’t find anything
within your budget then opt for some kind of short-term
arrangement and then look out for gaps to appear in
residences or established digs as students either don’t take
up places or start to drop out.
Year-to-year occupation
One immediate benefit to buyers is that their properties are
occupied by tenants on a year-to-year basis. This is perfect for
the owner who doesn’t want to be tied into a longer lease term
than necessary. Having a yearly lease also helps with annual
maintenance of the property and allows for easier control
of  any  potentially problematic tenants. Annual renewal also
allows new clauses to be added into lease agreements yearly and
for the lease agreement to evolve to best suit your situation. This
type of letting is much more flexible and allows property owners
to adjust rent as the market evolves, without being locked into a
fixed percentage annually.
Location matters
Investing in a secure setting like a security complex or sectional
title development gives any tenant a feeling of security
and will justify paying a bit more for the rental property in the
long run. This also keeps demand for your property high and
allows your property to remain competitive year-on-year despite
prevailing economic conditions.
Investing in a property that is close to major access routes
along which the Jammie shuttle travels or within easy access
of educational institutions is always a prudent move. This is a
desirable feature that can be listed when advertising the property
to let. Parents who are leasing homes for their children want the
peace of mind knowing that their children will be safe and able
to easily get to their institutions of learning with as little hassle
as possible. Access to a bus route also means that parents don’t
necessarily need to spend the additional cash on a car as well.
Investing in property for the sole aim of letting to students
has many benefits provided that your tenants are properly vetted
prior to occupation. There is a constantly growing demand for
accommodation close to institutions of higher learning and
amenities related to them. This form of letting produces an
excellent return on investment and can be a  steady  income
stream should you embark on it.
SOURCE Greeff Properties; Gumtree