Research shows the best university locations to buy in …
New research shows that student real estate portfolios based in smaller college towns tend to generate the best returns.
Results, from Paragon Bank, reveal the 10 best locations for student real estate investing, highlighting the places where investors can generate the highest rental returns.
Swansea tops the list with an average return of 9.56% for student property, with an average house price of £ 231,534.
Cities with a single university offer some of the best returns, with seven of the top 10 having only one main higher education institution.
Student populations in these locations were also generally smaller, at less than 25,000, suggesting that the best returns aren’t always found in big cities.
The second most profitable location is Hull, home to 14,255 students, where the city’s average student property generates a return of 8.68% per year. Of the top 10 locations, only Liverpool, Coventry and Leeds had more than one university.
Liverpool, the highest performing large city with two or more universities, had an average house price of £ 225,178, with an expected rental yield of £ 18,569 per year on average, or a yield of 8.25%.
Investor demands for student accommodation in Liverpool, Salford and Bolton have increased over the past six months, up 21% by UK and international investors, according to The Mistoria Group.
Misteria Managing Director Mish Liyanage says, “Undoubtedly, investors get considerably higher returns with properties rented to students, compared to those rented to non-students in the same town or city.
“For example, student landlords in Liverpool achieved an average gross rental yield of 13% in the third quarter of 2021, compared to 9% for those who did not rent to students.
“Student property can be similar to a normal hire purchase, where the entire property is rented out among friends who cohabit, or a student HMO where students rent out each room individually on their own rental agreement.
“A property is considered an HMO if at least three tenants live there, form one household, and share bathroom or kitchen facilities with each other. Investors can currently acquire a four bed HMO for students and professionals, fully refurbished and furnished and rented for the coming year, for less than £ 175,000 in Liverpool.
“Investing in HMO student accommodation offers a long-term investment option, as property is very likely to be in constant demand throughout the calendar year. ”