If you went to university or college, you can probably remember the amount of money you spent on living expenses over those four or five years. Whether paid to your school’s housing facility or handed over each month to a landlord, it was a big chunk of change that you never saw again. Now you’re a working professional, thinking about your financial future, and you understand the value of real estate. A student condo investment can be a great starting place for first-time buyers.
WHAT IS A STUDENT CONDO INVESTMENT?
For someone who wants to enter the real estate market, buying into a student condo development may be a smart move that will grow your financial portfolio today and potentially save you money in the future, if and when your own children need a place to live while attending college or university.
Student condos are a common housing option in many of Ontario’s big university cities such as Toronto, Waterloo, and Kingston. For first-time buyers as well as seasoned investors, the value of student condos is clear in the low entry price points, which means a minimal down payment, matched with an immediate rental demand from thousands of students who need a place to live. In fact, the ongoing demand for housing in university and college districts acts as a kind of investment security against economic changes. As long as the school doesn’t pick up and move, the students will always need a place to call home.
Launching currently in Kingston, IN8 Development’s Sage Prestige Condos is a great example of this type of investment. Geared towards the students of Queens University, the project is offering fully-furnished condos starting at $472/sqft. The units come with a two-year minimum lease guarantee, two years of free property management, and capped development charges below $6,000. Like most student condo developments, it’s a potentially profitable piece of real estate for the savvy investor. To learn more about the Sage Prestige project, Condo Pro Gloria Yeung is the expert to speak to.
5 TIPS ABOUT STUDENT CONDO INVESTMENT
1. Trust the developer. Before you buy, do some research into the developer’s project history to know whether they offer a quality product. In the case of Sage Prestige in Kingston, IN8 Developments is well-known across the university district of Waterloo for its innovative housing solutions that maintain a high demand from local, student residents every year.
2. Watch for rental growth. In most university districts, the demand for rental units will be relatively high and consistent year to year, as new students join the campus each term. But you also want to make sure that the rental market is growing. In Kingston, for instance, there has been 37% rental growth over the past 10 years, and the current average rental price for a single room is $725/month.
3. Quality over quantity. One of the main reasons why students will decide to rent a condo or apartment is because a room in the university housing is unavailable. At Queens, there are 3,900 beds in student housing for a population of around 23,000. Offering a new condo with desirable amenities in an over-populated rental market is like fishing with dynamite.
4. Down payment doubt? For many first-time buyers, the biggest obstacle in taking the leap into the real estate market is fronting the funds for the down payment. For a project like Sage Prestige in Kingston, you could own a fully furnished condo with a 5% down payment for as little as $10,000 plus closing costs. Given the current rental market in Kingston, an average two-bedroom condo would recover the down payment expense within one 8-month academic year.
5. Get in early. In a similar way that new car models are priced and sold, student condo developments tend to be built in phases, with increased pricing for each new phase. Buyers in the first Sage Condo project in Waterloo saw an accelerated performance in capital appreciation due to the increased pricing of subsequent projects. The one-bedroom units in Sage II realized a 35.6% appreciation in value versus the price in Sage Platinum, three years later.
While we’ve used IN8 Developments’ Sage Prestige project as a clear, current example of a student condo investment opportunity, these tips act as a smart starting place for first-time buyers and investors interested in any student condo project now and in the future.
Just because you work and/or live in Toronto, you can still buy a condo somewhere else to get started in the real estate market. You should be thinking about entering the market wherever the investment makes sense and offers a consistent source of revenue.