Why Tower Blocks or Student housing are great investments for cash buyers!
Publish Date: 04 September 2023
By Jade Shrubsole
Further reading
Debunking Common Myths About Property Auctions
Buying out-of-area properties at auction can be beneficial for several reasons
Why Tower Blocks or Student housing are great investments for cash buyers!
Cash Buyers Preferred: Lenders often perceive higher levels of risk associated with financing large and tall structures. These types of properties are ideal auction properties, as auctions are known to have many cash-ready buyers.
Steady Income Stream: Both tower blocks and student housing typically offer a consistent rental income. In the case of student housing, the demand for housing from students tends to remain relatively stable, providing a steady flow of rental payments.
High Demand: Tower blocks are often located in urban areas where there is a high demand for housing due to population density and limited space. Student housing is in demand near educational institutions, as students require housing during their academic years.
Diversification: Investing in multiple units within a tower block or student housing complex provides diversification of income sources. If one unit becomes vacant or experiences issues, the overall impact on your investment portfolio may be minimised.
Location and Accessibility: Both tower blocks and student accommodations are often strategically located near amenities, public transportation, and essential services. This makes them attractive to potential tenants, ensuring a higher occupancy rate.
Professional Management: Many tower blocks and student housing complexes are professionally managed by property management companies. This can alleviate the burden of day-to-day management tasks for the investor.
Government Support: Depending on the location and type of property, there may be government incentives or support for investing in affordable housing, student housing, or urban development.
Scalability: For cash buyers with substantial capital, investing in multiple units or entire tower blocks can offer scalability, allowing them to build a significant real estate portfolio.
Resilience During Economic Downturns: While no investment is entirely immune to economic fluctuations, affordable housing and student housing tend to maintain a level of demand even during economic downturns.
Short-Term Rental Potential: With the rise of platforms like Airbnb, some tower block units and student accommodations can be converted into short-term rentals, potentially yielding higher rental income during peak tourism or event seasons.
Potential Pitfalls:
Financing Costs: If you're using financing to purchase the property, interest rates and loan terms can significantly impact your overall return on investment.
Market Saturation: In some areas, there might be an oversupply of tower blocks or student housing, leading to increased competition for tenants and potentially lower rental yields.
Tenant Turnover: Student housing can have higher tenant turnover rates due to the nature of student life. This can lead to increased vacancy periods and turnover costs. Depending on how the tenancy is set up, having only term-time payments can mean summer months with missing rent.
Maintenance and Upkeep: Tower blocks and student housing complexes require ongoing maintenance and repairs. Managing and funding these maintenance needs can be challenging, especially for larger properties. Cladding issues from high-profile incidents, most notably the Grenfell Tower fire in London in 2017, which claimed 72 lives, These incidents have highlighted significant concerns and risks related to cladding on tower blocks.
Antisocial behaviour: Student tenants might not always be as responsible or considerate as other types of renters, potentially leading to more wear and tear on the property.
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