This article is intended to help University of Guelph students and parents who are searching for Guelph student rentals to purchase.
Over the past few years (especially 2022), students have had a difficult time finding accommodation. And, as we move into late 2023, the problem doesn’t seem to be getting any easier. In fact, for the first time the University of Guelph announced that they no longer guarantee residence space.
This decision has cast numerous problems in Guelph housing- for students, which is also severely impacting non-student rentals as well. These University of Guelph students, many of them still teenagers are left scrambling to find housing that may or may not even be close to the University.
As a result, many parents of children attending the University of Guelph have often opted to purchase a property. In early 2023, this resulted in real estate bidding wars especially in student populated areas.
Now that we’re into the Fall of 2023, this is the season parents start to call us about purchasing a home for their child.
Buying student rentals in Guelph
Parents have increasingly started purchasing homes that their child will live in during university. But: many parents have never considered getting into a student rental business (sound like you?).
Done properly, investing in Guelph real estate for your child could be a lucrative and less stressful option. Those considering a student rental in Guelph don’t necessarily need to be a large investor, or a parent of a child at University.
And if you are a parent, you can always keep it as part of a longer term investment strategy after your child graduates.
But here’s the insider tip: if you are considering buying a home for your child, financially you’ll do much better if you make a purchase before January. Why?
Because January is the time when students start looking to rent houses for the May 1 start date. It’s also the time when many parents start looking for their child to buy- so, buying before this time often provides more options at cheaper prices.
Why would I buy a property? Let’s do the math
In Guelph right now, rent prices are some of the most expensive in Canada. Couple this with declining real estate prices in Guelph and you have a recipe for investment. Let’s compare rent vs owning costs.
Your child is going to likely want to get together with a few friends to live together. Lets say they all pay $800 per room x 4 rooms= $3200 per month.
This is the traditional way of sending a child to school. One monthly rent cost, sign a lease with a few friends and move year over year.
Purpose built student rental properties are often 4 bedroom. A good example are the Solstice 1 and 2 buildings located at 1219/1291 Gordon St. These no frills condo units are basically upgraded dorms full of students and have study rooms, building wide wifi, a gym, party room and rooftop terrace.
A 4 bedroom unit here sells around $600,000. On a rental property, you would require a 20% downpayment (of which most people use a line or credit, savings or equity from their home to obtain). So, with a purchase price of $600,000- 20% ($120,000)= $480,000 mortgage:
A $480,000 at 5.59% fixed rate is $2955/mth
Taxes and condo fees are $813
Total of $3768.
Renting: a private room (and sometimes private bathroom) in a prime location costs your child $800 per month and the group $3200
Buying: In this scenario, the group pays you $3200 and the cost to own it is $3768. This means it costs you $568 to own it- but you own it! And it still costs less than the $800 your child would be paying for rent!
At the end of the University term, you have 3-4 years of mortgage payments paid off, equity if the value of the property increases and tax write offs along the way!
What do I need to know about buying a student rental?
There are a few things you should know about the rental market in Guelph to be successful:
The student lease cycle typically runs May 1 to April 30, so many investors begin their search early in January. Their hope is to close on a property around the timing of the new cycle.
Where do students look to find rentals?
Most student rentals do not go through realtors. The best option for students to find rooms and landlords to advertise is The Cannon.
Students usually pay premium rent
Unlike renting to young professionals, students typically pay by the room. The going rate in Guelph for a room is anywhere between $700-1100 per month. This depends on condition of property, location and number of rooms.
Finding cashflow rentals is challenging with student housing in Guelph
There are many metrics investors use to determine the investment value of a home. Ideally out of the gate the property cashflows (brings in more money in rent than it costs to own).
Finding a property that cashflows is becoming increasingly difficult in Guelph, although these properties do still exist. Guelph homes have increased significantly and market rent is not enough to cover the expenses to own it.
Landlords must often decide between a number of factors. One is whether they are OK with negative cashflow for long term appreciation. The other is what type of property: a detached house, a semi or townhouse, or condo such as 5 Gordon St.
Know the rules about students
The City of Guelph is pretty strict on student housing- as they should be. As a general rule, there should be no more than 4 students in one legal dwelling unit. Anything larger is considered a lodging house and requires separate annual approvals.
If your child is in a house with more than 4 students total, be sure to ask questions. Sometimes landlords will try to “make the financials” work by illegally piling students into a home. Which, as parents ourselves is terrifying.
Make sure you get student rental insurance
Student insurance is not the same as general home insurance. In fact, many insurers will not even provide a policy to investors of student housing in Guelph. Or, if they do it’s at a premium.
This doesn’t mean you just “pretend” the students are not students, because that could void your policy in the event of future damage.
Student home insurance makes sense for those renting out student housing in Guelph as it covers you for most types of property damage like fire, water damage, windstorm, etc.
Having this type of insurance also protects your assets against various lawsuits that can stem from owning a student rental.
What happens if I want to buy a student rental property in Guelph that already has tenants?
You don’t want to go down this route without guidance from a Guelph real estate agent. There are many pieces that need to come together to ensure that if you want a vacant property upon ownership, that you get one.
Done incorrectly it can become a very costly legal battle.
In summary, students in Guelph rent a property with lease from May 1- April 30 (a “term lease”). A signed term lease trumps everything and you cannot simply tell a tenant they need to move out within the term.
If you wish to have a property vacant for your child to move into upon closing, a series of documents and paperwork need to be filled out in advance, including careful wording in a Purchase and Sale agreement and a properly executed N12 document. Even then, vacant possession could become a challenge.
Here are some of the popular off Campus Guelph student rental options, either to purchase or rent:
In Guelph, most students enter off campus housing after their first year in residence. Although students could live in most areas of Guelph, these are some of the more popular options due to proximity to transit, amenities and campus.
302 College Ave.
Within walking distance to University of Guelph, this townhome development built in the early ‘90s with a high student population. College Ave. townhomes range in size, have 3-4 bedrooms. The average price was $650,000 in late 2022.
1055 Gordon St and 1155 Gordon St.
Built in 2006, this development is located south of the university. It’s conveniently located directly on Gordon St. with high-frequency bus routes travelling to the university. Also, highly student-populated, the average price here in fall 2022 was roughly $700,000
1219 and 1291 Gordon St (Solstice 1 and 2)
Purpose built for students, these are self proclaimed “premium student rentals”. most of the units in these two developments are 4 bedrooms, with the odd smaller unit. As far as Guelph student rentals go, these are popular for students and investors.
High speed internet and most utilities are covered in the monthly maintenance cost. Additionally, the properties have study areas on each floor, party rooms, games room, exercise rooms, bike lockers and more.
Both of these properties are located directly across the street from a major Guelph bus route.
One note: lenders tend to be a little tougher on these buildings and may require a larger downpayment on a purchase. This may also trigger a higher mortgage rate- for the best mortgage rate options, read this blog.
Most student houses are either a 3 or 4 bedroom house or apartment. Recently built units have 4 equal size rooms, there is no master bedroom or one large bedroom and 3 small. Student rooms are all the same in these
142 York Rd.
This development was built in 2004 and is almost 100% student exclusive. With 4 bedrooms and 2 bathrooms, this dorm-like townhouse setup is a convenient walk across York Rd. Park to Gordon St. There are only 24 units in this development and they are hard to come by. In 2022, there were a number of sales- one ever over $700,000. The average was around $600,000.
There are no student amenities in this development- the condo fees are just to take care of the property. The development is pretty bare bones, which for some investors is a good thing. This way, less can go wrong that would impact future reserve funds or condo fees.
Should I be nervous about renting to students?
Not if you do your due diligence.
Renting to students is not about renting to female students versus male students. It’s about getting the right students for your property.
This means you should be present when interviewing a prospective tenant and do your due diligence. Ask for employment letter, ask for references and ask for a backup plan in case they can’t pay the rent (like a parent co-signer)
You’ll find that most student rentals in Guelph are within a 1km proximity of the University of Guelph campus. They’re close to the grocery store, bus stops, easy access or a short walk to campus.
Considering purchasing a student rental in Guelph?
Beth and Ryan Waller are Guelph real estate agents with Keller Williams Home Group Realty. We help many parents buy student rental properties in Guelph and we can help you too! Give Ryan a call directly at 519 546 3390!