student accommodation wellington

[frazzledfozzle]

Hi just wondering if anyone here has experience with student accommodation particularly The Cube which is leased out to Massey.

I was wondering if it would be a good starter for someone new to property investment and also wondering if Massey dropped the lease would these apartments be easy to let out to the jo blows of the world?

Ta very much
frazz

[eri]

be very careful when looking at % returns calculated by agents for student apartment accom

typically the agents will calculate the net return figures by multiplying the high rate weekly rent that overseas students pay when they arrive in feb/mar for 52 weeks

most os students will return home at the start of nov. and not return for 10-15 weeks

so there is a huge glut of small empty apartments over that time

for example a 2bed apartment rented by students in auckland may get $420pw for 40 weeks = $16,800pa

the same 2bed apartment to longer term tenants would pay $350pw for 52 weeks = $18,200

however the agent would be showing you a yearly return of $21,840

such a difference will generally knock about 2% off the net return

ie agent shows numbers, for an ugly little shoebox with poor everything, of 11%, but probably 9% the best you'll get....typically a sliding cv

numbers shown of 8% for an average box, best you'll get 6%....future of cv flat

numbers shown for something a nz'er would consider living in for 52 weeks, 6%, best you'll get 4%....most agree cv should rise

[kapitibeanman]

eri's figures look credible to me.

I had a great 7 or 8 year run doing that, not with students though, more hotel type clients, it
was all hassle free and a good yield, I think I was lucky.

I'm not familiar with The Cube, but imagine that a "student" building would need robust management.
If that management were to be stopped or interrupted for any reason, care would need to be
taken to avoid degradation of the building environment. Are all the owners in The Cube leased
to Massey? If so, all the owners may suddenly have to become more hands-on, whatever their
level of experience or competence, should the lease be dropped. That could get ugly if mishandled.

Running your own rental would be more educational.

Leases can be dropped because a newer & shinier building beckons, leaving owners in the old
building either competing with their ex-lessee in the same market or having to look elsewhere.
Either way, could be a bit of a shock to the unprepared or inexperienced.

I'm not quite as negative as eri about small apartments, as I've lived in them and own them, and find
them ok, just a different market. Once you've learned to tuck your elbows in when turning,
they can be fun to live in, and fit for purpose to rent out.

[jimO]

you would be better off looking at student rentals in Dunedin, generally rented in 12 month blocks for exorbitant amounts

[eri]

yeah but then you have to deal with undie 500 types...

http://en.wikipedia.org/wiki/Undie_500_Car_Rally

[jimO]

yeah but then you have to deal with undie 500 types...

http://en.wikipedia.org/wiki/Undie_500_Car_Rally

not any more

[eri]

i'm not sure

their feeling of entitlement

to drink, drive, dope and destroy

will be halted by the loss of

"official" status

fingers crossed you're right

[Wayne]

Leases can be dropped because a newer & shinier building beckons, leaving owners in the old building either competing with their ex-lessee in the same market or having to look elsewhere.
Either way, could be a bit of a shock to the unprepared or inexperienced.

Wouldn't this depend on the lease agreement with Massey? This becomes more or a commercial situation so the terms of the lease would be key

[Wayne]

you would be better off looking at student rentals in Dunedin, generally rented in 12 month blocks for exorbitant amounts

sounds like a brilliant idea :-)

[xenophobicfruit]

Student accommodation in Wellington is under a lot of pressure because there is a lack of affordable student accommodation.

I do not own any of the apartments in the complex but I am very familiar with the building in question. I know that compared to when it first opened the management of the apartment is a lot better now. Still I personally would steer clear of making such an investment unless you were already experienced in apartment investment.

The nuances of owning and renting out apartments is not simple. In my experience it has been a different sort of ball game, one which could have you in for a bit of a shock sometimes (unexpected maintenance for instance).
Apartments can sometimes suffer from very slow capital gain, so crunch your numbers carefully and make sure that it stacks up first!

[frazzledfozzle]

thanks everyone for your replies I really appreciate it

[artemis]

A guy I know used to do maintenance for student accom in Wellington (not Cuba). Plenty of the students had no real idea how to look after a place. I suppose they were waiting for their mums to come down and clean up for them. Anyway, lots and lots of minor (and some major) regular maintenance needed - damage to walls from nails and the odd boot, broken mirrors, kicked in doors, stuff ground into carpets, and on becoming vacant general deep grime or worse.

[jimO]

A guy I know used to do maintenance for student accom in Wellington (not Cuba). Plenty of the students had no real idea how to look after a place. I suppose they were waiting for their mums to come down and clean up for them. Anyway, lots and lots of minor (and some major) regular maintenance needed - damage to walls from nails and the odd boot, broken mirrors, kicked in doors, stuff ground into carpets, and on becoming vacant general deep grime or worse.

funnily enough the owner of the flat one of my sons has moved into must have been waiting for his mum to clean the place, cos he didnt

[cube]

A guy I know used to do maintenance for student accom in Wellington (not Cuba). Plenty of the students had no real idea how to look after a place. I suppose they were waiting for their mums to come down and clean up for them. Anyway, lots and lots of minor (and some major) regular maintenance needed - damage to walls from nails and the odd boot, broken mirrors, kicked in doors, stuff ground into carpets, and on becoming vacant general deep grime or worse.

Not sure I know many mums that would tolerate "damage to walls from nails and the odd boot, broken mirrors, kicked in doors"

[Viking]

Cube, do you not have tenants called Mums?