Following on from last week’s blog post about the Medway student property market in Gillingham, which you can read here, this post will discuss some opportunities for the student market in Chatham.
After my last post I talked with several landlords regarding their concerns about the student property market in Medway. Many were worried that oversupply has made investing in Medway student Homes of Multiple Occupancy (HMO) less attractive. There seemed to be a general consensus among my Medway landlords that the increasing amount of corporate student accommodation may continue to reduce demand for traditional private HMOs in Medway, such as those in Gillingham.
But there is more to consider for investors who view corporate student accommodation as an investment with decent and secure returns alongside being relatively ‘hands-off’. Those lured in by those factors may regret it when they wish to sell because such property has a relatively niche buyer’s market, whereas student HMOs appeal to investors as well as families who are desperate to get onto the property ladder.
Ultimately, a student HMO gives you more control over your property as you have increased options and exit strategies if the student rental market changes in Medway and it becomes necessary to sell the property or change its use.
But deciding to invest in a student HMO means that you should carefully create and execute a plan to ensure that your accommodation will be able to compete with the corporate providers. This plan should encompass: picking a property with the right location and rental demand, refurbishing your properties to a good standard in order to secure the best rent, and making sure that the numbers stack up.
One such area of high rental demand is near the University of Creative Arts (UCA) Rochester, that lies on the border between Chatham and Rochester. Behind UCA Rochester there are several roads in Chatham that are close to the station that make good student-lets for the approximate 500 student residents.
216 of these students are housed in purpose-built university accommodation found along Doust Way, which is opposite the UCA. These are made up of flats of six bedrooms with shared kitchens and communal areas, and are exclusively reserved for first-year students or those with vulnerabilities.
There are several HMOs on Boundary Road and the surrounding area.
Rents for students on Boundary Road average at around £74 per week. Over the past 12 months, terraced properties have averaged at £185,000; that would bring a gross yield of 10%, which isn’t as attractive as the gross yields being found in Gillingham. However, Boundary Road has a prime location next to Chatham station and so is well placed for good capital growth.
On a related note, this week I’ve been looking at a Medway property in an upcoming auction that has HMO possibilities. I went along with my builder and architect and priced up the work required, calculating that the property should bring in a minimum 16% yearly return on investment. If you are seeking advice for your Medway property investment, I am happy to look at the numbers for you free of charge. My numbers 07944 726676, or email me at firstname.lastname@example.org.
Or you can arrange to see me at my offices in the Innovation Centre Medway.