They say that size isn't everything , but for investors when it comes to student rental income it's usually at the top of every list. But how can you confidently predict what that income will be from what is currently still a construction site? Fortunately help is at hand...
The vast majority of PBSA on the market are offered to investors "off-plan" which means agreeing to purchase a property before its built and therefore before it has a track record of being a successful student development. The rewards for this include relatively low purchase costs and usually a good selection of student rooms to choose from .. off the plan.
But without a proven income from the development, how can you be satisfied that your investment is going to give you the income you expect and have been "promised" by your sales agent?
The answer as usual is to do your own homework but seeking out the closest established student halls, closest in a number of ways. When choosing your comparisons, consider:
- Location - proximity to the development you're considering
- Age and design
- Target audience (Undergraduate, overseas, postgraduate)
Often the developer will provide you with a set of income projections. That's fine, but scrutinise these for accuracy. Ask yourself:
- Are these sufficiently detailed - is there a spreadsheet breakdown of costs and rental income, or just headline figures with little or no justification?
- Do these figures come with citations or references to justify them?
- Can the figures be easily verified?
The more data the developer or agent provides you on request the better: it shows there confidence in their development and their commitment to you as a serious investor.
Where this isn't immediately to hand, all is not lost. Comparative data can be obtained by desktop searches, speaking to university accommodation offices and speaking to the student management company that has (hopefully) already been signed up to run the development.
Armed with this data and some nifty spreadsheet work it's then much easier to make your own realistic projections on income and see how this squares with the developers' own.
When HighGround looks for a suitable student hall to offer our investors, we carry this out as a matter of course, regardless of the volume of figures given to us by the developer. We insist on independently checking every assumption to our total satisfaction before we offer it to our investors.
If it doesn't stack, we reject the development. But hey that's just us.
Find out more about why UK student rooms remain so popular with investors. Here is a great introduction, backed up by some solid facts and figures. Download our Student Property Guide today: