Parents: How to invest in student property

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Instead of throwing money away on rent, savvy parents are snapping up new-build buy-to-let properties near their child’s campus, as well as having peace of mind that your child will be staying in good quality accommodation, you can also make money by letting the other rooms to students, as well potentially profiting from capital appreciation when you decide to sell.  
Parents looking to profit from their child’s education is still an emerging idea in the UK, but it has been apparent in areas such as California for decades, with parents purchasing high quality housing as a safe and secure location for their children to live in and as an long-term investment.
If the idea appeals to you, here are our top 5 tips for investing in student property:

Opt for new

For the price they are paying, students now demand high-quality fittings, en suite bathrooms, Wi-Fi and decent-sized living spaces and kitchens. Buying an old house and maximising the number of bedrooms and squeezing in lots of students, although tempting, may no longer cut the mustard. 

Consider the location carefully

Not many colleges allow for student parking, so try to purchase a property which is within walking distance of the university campus, on a bus route, or with good cycle routes. New-build properties tend to be well served by public transport routes – another reason to think new!

Budget carefully

It is important that you think about the financial aspects of your investment carefully. Most lenders demand a 25% deposit for buy-to-let properties and a 40% deposit before offering the interest-only mortgages that usually work out best for investors.
Most lenders expect the rental income to be 125% of the mortgage, so do your research into the average rents by property type in the area to see what you can realistically achieve. Remember also that students are hard on furniture and fittings, so budget to replace items every two years. 

Future-proof your property

Another reason to go for a new-build property, if your budget will allow, is that they tend to come with easy-to-replace kitchen worktops, cupboard doors and vinyl floors. Other factors that may appeal to students include outdoor decking, bike sheds, large fridges and freezers, high-speed internet, and a communal living area.  

Consider international students

While your son and daughter may return home between terms, international students may wish to let the second bedroom all year round, giving you higher income. To eliminate hassle for yourself, you may wish to try and find a tenant who is keen to stay in the property for the full duration of their course (usually three or four years). To reduce the risk of rent arrears you should also try and get a parent to act as a guarantor.
Get specialist buy-to-let insurance, as well as mortgage advice, at today!
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