For investors of student housing in Guelph, the new year brings new opportunity to create or expand their real estate portfolio. 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.
Who is a buyer of student housing in Guelph?
Those considering a student rental in Guelph don’t necessarily need to be a large investor. Often times parents purchase a home for their child as an investment while they attend post-secondary education.
Parent buying for student children
In today’s market, rent prices are on the rise. Parents also likely have a fair bit of equity in their existing primary residence. As a result, parents are considering buying a property in the city that their child is attending school.
The child then gets together with 3-4 roommates and then rents out the remaining rooms to friends to cover costs. The goal is that over the time the student lives there, the property will appreciate in value. Then, the parent would then sell when they no longer require the residence. Or, hold onto the property as another means of producing income.
If a parent is purchasing student housing in Guelph for a child and live outside Guelph, there are a few things to consider. Firstly, you’ll want to work with a Guelph Realtor who knows where the areas are that are more tolerant of students (see below). Secondly, you’ll want your students to be near students- the last thing you want is a group of 4 students in a 55+ retirement area that is nowhere near a Beer Store.
As a former student, we sometimes wonder why anyone would consider renting to students. But there are many good reasons!
Annual tenant changes
Students will often go where their friends go. And being in University, there is a lot of change. Renting to students often results in a one year lease. While some would view this as more work, it also provides many benefits.
First, if you end up with a bunch of rowdy students, they’ll eventually leave. It allows you to start fresh with new students on an annual basis. If they’re good and they want to stay, sign another one year lease. But rest assure you won’t have long term students living in your rental.
Secondly, it will allow you to make changes, repairs and updates regularly. This will in turn allow you to get market rent with your new tenants each year.
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 $500-700 per month. This depends on condition of property, location and number of rooms.
So, lets say you have a 4 bedroom student rental that is updated and in a location near the University of Guelph. You can expect to get $2800 in rent per month. In many cases, this is a premium to what you’d receive if you rented to a single family.
But it’s not all easy money. Renting to students can be far more demanding and put more wear and tear on your property than a single family renter.
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: detached, semi/ townhome, or condo. Beth and Ryan write about the pro’s and con’s of buying a condo here.
Considering buying a student rentals in Guelph? Here are a few student developments worth considering, as well as their performance over the past year:
Edit: in 2021, we updated the below properties with one year performance
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 $411,000 in 2019, which is a 6% increase over 2018.
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 2019 was $469,000, a decrease of 2% from 2018.
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. Only one unit sold in 2019 at $324,000.
A few notes before you invest in student rental properties
Generally, students will gather a few friends to move in together and split the rent. The going rate per room can anywhere between $500 to $800 per month, with some exceptions. Some landlords require the tenants to pay utilities and sometimes they include them.
Live outside Guelph but considering a student housing in Guelph? Ensure that you have a plan in place for yard maintenance, snow removal and general upkeep. This could be with the tenant, or with a property management company.
Make sure you understand the legalities of student housing in Guelph
It’s wise to work with Guelph realtors who understands the legalities and by-laws of student rentals. Guelph has strict policies on student housing in Guelph- and rightfully so. We’ve seen situations where students are living in unsafe spaces. Not only is this an obvious safety hazard for students, but your insurance company is likely to void any insurance for such setups.
In the most basic terms, you cannot have more than 4 students living in a home. And, they cannot have locks on their individual doors. More than 4 students with individual living spaces would be a rooming house and would require a different set of rules and regulations. The City of Guelph is very active with student housing in Guelph, so you need to ensure you are compliant at all times. And, you also need to ensure that your students understand the by-law and safety implications.
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.
Common student rental insurance features include:
Building and Contents: covers your building structure and your owned contents such as appliances.
Rental Income: for income loss in case your tenants are unable to occupy your property during a repair.
Equipment Breakdown: covers you when furnace, AC or other items break down
General Liability Insurance: if a tenant injures themselves while on your property such as slipping and falling
Sewer Back Up
Beth and Ryan Waller are Guelph real estate agents with Home Group Realty.
Source: GDAR, 2018-2019, City of Guelph single family residential homes. The authors do NOT have any personal interest in any properties mentioned in this article.