According to Canadian Real Estate Wealth Magazine, “Canada’s student population continues to rise steadily. Over 940,000 full-time students [were] enrolled at 82 university institutions across Canada in September 2013. Of that number, over 424,000 came from outside the universities’ host communities, many of whom are looking to stay in private accommodation.
Over 100,000 of that overall number hailed from outside of the country, with over 265,000 international students now currently studying in Canada, marking an increase of over 94% since 2001.
The International Education Strategy aims to double the number of international students and researchers to 450,000 in Canada by 2022… Despite these growing numbers, there are only 114,297 beds on all university campuses to serve students [and] most educational centres have a policy of only providing residence to first-year students with most having to depend on the private sector to accommodate them.
Almost all universities country-wide need more accommodations. The student market is one of the most under-served yet is one of the best opportunities.”
“Why is the student rental market so underserved? The truth is they scare a lot of people.”
Many think that student rentals are synonymous with the roof-raising parties of “Animal House” where homes are destroyed, furniture gets thrown through the windows, and of course, rent never get paid by delinquent students.
In reality however, the perceived downside risks are easily managed (click here to read how we manage them) and the upside rewards are often overlooked.
The upside of student rentals:
More cash flow: Student houses are rented by the room, so the monthly cash flow is stronger than a typical single family home. In one of the neighbourhoods where I invest, for example, a single family home can rent for $1500 -$1700/month compared to a student rental which can fetch $2850-$3150.
Less vacancy risk. If you own a single family home and it is vacant, then you receive absolutely ZERO rent for every month that it remains unfilled and therefore 100% of the expenses will come from your own pocket.
Since student rentals are rented by the room, even if one room in a 7 bedroom house is empty, you are still 85% occupied and can cash flow. Talk about peace of mind.
Greater rental payment security. No, that is not a typo. You might think that when dealing with students, there would be lots of non-payment issues, however, unlike single family homes, we require the students’ parents to act as guarantors on all the leases. If a regular tenant loses their job, you can try to take them to court, but that can also be costly. With a student, you just need one phone call to a parent and you will have your money.