High rentals for student accommodation
Many landlords are hesitant to let their properties out to students because, as they see it, the risk of damages and other problems are simply too high.
But, says David Beattie, Principal of the Cape letting agency, Chorus Letting, it is in this sector the student accommodation market that the opportunities for buy to let landlords are too good to be missed.
Although there may on occasions be certain perceived risks in the student market, these are not serious and if landlords understood the strong, consistent returns achievable here, they would inevitably find the propositions open to them attractive.
A belt of rentable properties extends from around the City Bowl to Kenilworth and almost any rentable property here will find student tenants. In addition these properties marketed at the right time and at the right price will almost never be empty due to the high demand said Beattie.
Often, he added, these are students who have had a year in res at UCT, the Technikon or the nurses quarters and now want the freedom of their own place. In some case, concerned parents will be involved in the choice and will be looking for a safe precinct, excellent security and a high level of comfort.
Properties with student tenants give noticeably higher returns than the average for the simple reason that each student will usually occupy one bedroom for which he or she can pay anything from R2400 to R3500 per month. In addition, the sheer volume of tenant demand in a relatively short focussed period of time (November to February) boosts achievable rentals.
Beattie tells of students coming into his office literally crying because they are so desperate to find somewhere to live.
In practice this means that the going monthly rate for a two bedroom apartment is R5 700 to R7 500. For a four bedroom unit it is R9 500 to R13 000 and for a six bed unit R15 000 to R17 000m, but can students be relied on to look after a property?
My experience, said Beattie, is that this depends on three factors.
The first and most important is the managing agent. If he knows his job he will at the outset spell out to students what he and the landlord expect, and explain the penalties (such as deposit forfeits) if these conditions are not met. He will also visit regularly to check on the condition of the property and the behaviour of the occupants.
The second factor is the age and the seniority of the students. Post grad students usually make ideal tenants and those in their second to fifth years tend to be better than freshmen.
Thirdly, there are the parents. If they are paying the rent (and the deposit) they will usually exercise a measure of control even if they do not live in Cape Town.
Landlords wishing to achieve maximum rentals, says Beattie, should realise that the timing of the rental offering is important.
Leases must start on the 1st December, 1st January or 1st February. On any period outside this timeframe, the rentals will be lower.
Then, too, it is important to carry out a detailed inspection of the property with the tenant at the outset. This should then be complemented by another inspection when the tenant leaves, after which the cost of repairing any damages that have taken place in the lease period can be deducted from the deposit.
Wherever possible, a double deposit should be obtained at the outset and parents should sign as guarantors.
On handover, says Beattie, the property should be neat and tidy and the finishes in a good condition. Students appreciate this and will take better care of a property given to them in a good condition.
The risk of serious damage in this market is not high and, as I have indicated, with returns being above average, this is a market no serious landlord should ignore.
Article by: www.chorusletting.co.za