What to Know When Buying Student Accommodation Property

Why Student Accommodation is Worth Considering

If you're a Gosford resident looking to build wealth through property investment, student accommodation might be on your radar. University towns across Australia are experiencing ongoing demand for quality student housing, making this niche market an attractive option for property investors. With the right investment loan and property investment strategy, purchasing student accommodation can provide consistent rental income and long-term portfolio growth.

Student accommodation properties differ from traditional residential investments in several ways. They often come with higher rental yields due to multiple tenants, and vacancy rates can be lower in established university precincts. However, they also require careful consideration of factors like body corporate arrangements, location proximity to campuses, and the specific investment loan features that suit this property type.

Understanding Investment Loan Options for Student Properties

When you're buying an investment property in the student accommodation sector, securing the right investment property finance is crucial. At Coco Finance Broking, we can help you access investment loan options from banks and lenders across Australia, ensuring you find investment loan products that align with your financial goals.

The investment loan amount you can borrow typically depends on several factors:

• Your current income and existing financial commitments
• The investor deposit you can contribute (usually 10-20% of the purchase price)
• Your loan to value ratio (LVR)
• The property's expected rental income
• Your overall investor borrowing capacity

Many lenders will consider the need for rental income when assessing your investment loan application. Student accommodation can generate strong passive income, which strengthens your borrowing position.

Interest Rate Options and Loan Structures

One of the most important decisions you'll make involves choosing between a variable interest rate or fixed interest rate for your property investment loan. Each option offers distinct investment loan benefits:

Variable Rate Options:

• Potential interest rate discounts that change with market conditions
• Flexibility for additional repayments
• Ability to leverage equity more readily
• No break costs if you refinance

Fixed Rate Options:

• Certainty in calculating investment loan repayments
• Protection against investor interest rates rising
• Helpful for budgeting and cash flow planning

Interest Only vs Principal and Interest

Many property investors opt for interest only investment loans, particularly in the early years of ownership. This strategy allows you to:

• Maximise tax deductions on the interest portion
• Keep monthly repayments lower, improving cash flow
• Potentially invest additional funds elsewhere
• Take advantage of negative gearing benefits

However, principal and interest loans help you build equity faster and reduce your loan amount over time. Your mortgage broker can help you weigh up which structure suits your property investment strategy.

Tax Benefits and Claimable Expenses

One significant advantage of purchasing student accommodation as an investment is the range of claimable expenses available. When structured correctly, these tax benefits can significantly improve your return on investment:

• Loan interest payments
• Body corporate fees (common in student accommodation complexes)
• Property management fees
• Maintenance and repairs
• Depreciation on fixtures and fittings
• Stamp duty (in some circumstances)
• Lenders Mortgage Insurance (LMI) if applicable
• Advertising for tenants
• Insurance premiums

Negative gearing benefits allow you to offset any loss against your taxable income, potentially reducing your overall tax liability. Always consult with a qualified accountant to ensure you're maximising tax deductions appropriately.

Key Considerations for Student Accommodation Investments

Before committing to a student accommodation purchase, consider these important factors:

Location and Demand:
Proximity to universities, public transport, and amenities directly impacts vacancy rate. Research the specific university's enrolment trends and accommodation shortages.

Property Management:
Student properties often require more active management. Factor in property management costs and the potential for higher turnover between academic years.

Rental Income Assessment:
Lenders assess rental property loans differently for student accommodation. Some require valuer assessments of rental income, which may be calculated per room rather than for the entire property.

Body Corporate Considerations:
Many student accommodation complexes have specific body corporate rules about leasing, including minimum lease terms and tenant approval processes.

Financing Strategies and Deposit Requirements

The investor deposit required for student accommodation can vary depending on the property type and lender. Generally, you'll need:

• 10-20% deposit (though some lenders may accept less with LMI)
• Stamp duty costs (varies by state)
• Legal and conveyancing fees
• Building and pest inspection costs

If you already own property, you might consider using equity release to fund your deposit. This allows you to leverage equity from your existing home without selling, accelerating your portfolio growth and path to financial freedom.

Investment Loan Refinance Opportunities

As your circumstances change or when better investment property rates become available, an investment loan refinance can help optimise your borrowing structure. This might involve:

• Securing a better rate discount from a different lender
• Accessing equity for additional investments
• Restructuring from variable rate to fixed rate (or vice versa)
• Consolidating multiple rental property loans

Regular reviews of your investment loans ensure you're not paying more than necessary and that your loan structure continues to support your wealth-building goals.

Working with a Mortgage Broker

Purchasing student accommodation requires specialist knowledge of both property investment and lending criteria. A mortgage broker in Gosford who understands the local and broader Australian property markets can:

• Compare investment loan options across multiple lenders
• Identify investment loan features that suit student accommodation
• Guide you through the investment loan application process
• Help structure your borrowing for optimal tax outcomes
• Assist with calculating investment loan repayments under different scenarios

At Coco Finance Broking, we work with property investors throughout the Central Coast and beyond, providing access to a wide range of investment loan products tailored to your specific needs.

Moving Forward with Your Investment

Building wealth through property investment requires careful planning, the right financing structure, and ongoing management. Student accommodation offers unique opportunities for investors willing to understand the specific considerations of this market segment.

Whether you're purchasing your first investment property or expanding an existing portfolio, having the right support makes all the difference. From understanding Investment Loan Interest Rate options to structuring your borrowing for maximum tax efficiency, professional guidance helps you make informed decisions.

Ready to explore your options for purchasing student accommodation? Call one of our team or book an appointment at a time that works for you. We'll help you access the right investment property finance solutions to turn your property investment goals into reality.