Beat Rising Interest Rates: Benefits of PBSA Student Accommodation
With interest rates on the rise, it can be difficult to make a smart investment decision. Fortunately, those interested in purchasing PBSA student accommodation with cash may be able to benefit from higher yields, as well as avoid the potential risks associated with taking out a loan. In this blog post, we'll discuss the advantages of making a cash purchase for PBSA student accommodation in 2023 and how it can be beneficial to investors.
Understanding PBSA student accommodation
PBSA typically consists of studio apartments or shared living spaces, and they are usually located near universities or colleges. This proximity makes them a highly attractive option for students, who are looking for convenient and affordable accommodation options.
The facilities in PBSA properties are often tailored to the needs of students, including communal study spaces, gyms, and laundry facilities. As such, investors who own PBSA properties can expect a steady stream of tenants year after year.
The impact of rising interest rates on the property market
Rising interest rates can have a significant impact on the property market, making it more difficult for investors to secure financing for property purchases. As interest rates rise, borrowing costs increase, and investors may find themselves with higher monthly payments and reduced cash flow. This can lead to decreased profitability for investments and fewer opportunities for buyers.
However, purpose-built student accommodation (PBSA) properties are highly in demand and offer high-yielding investments with fully managed and hands-free investment options, as the majority of PBSA investment opportunities are managed by national student management companies, like Homes for Students. Unlike traditional rental properties, PBSA properties are specifically designed for student living, making them ideal investments for investors seeking high returns and low risk.
By purchasing PBSA properties with cash, investors can eliminate the need for mortgages and the associated interest rates, providing a more stable and predictable investment opportunity, in any case most PBSA apartments are studios and tend to be under 30 square metres, meaning you will not be able to obtain a mortgage anyway. Furthermore, fully-managed PBSA properties offer an armchair investment opportunity, with management companies handling all aspects of property management and ensuring a hassle-free experience for investors.
In the face of rising interest rates, PBSA investments offer a valuable opportunity for investors seeking to maximize their returns while minimizing their risk, with PBSA opportunities providing investors yields of +7%. As demand for student accommodation continues to rise, PBSA properties provide a unique and lucrative investment opportunity that should not be overlooked.
Where should I look for suitable PBSA student accommodation?
If you are interest in looking for suitable purpose built student accommodation then the best place to start is with cities and towns with good rated universities that attract high numbers of students from other areas and countries. Students coming from outside the area will require a place to live, and gone are the days where first year students cram into a dodgy mid terrace property, where no one washes the dishes. Location is a crucial factor to consider, when looking for PBSA student accommodation, it's important to consider proximity to universities, public transportation, and other amenities that students might find attractive. You'll also want to consider the local rental market and demand for student accommodation in the area. Nowadays many first and second year students want to live in safe secure surroundings, with other students that they can socialise with, close to either the town/city centre or close to the university, so travelling costs are reduced. Many PBSA establishments now provide full studio apartments, with a small kitchen, lounge and bed area, bathroom and a study area. Look for areas where this type of accommodation is in need, where the university does not have enough accommodation to satisfy the amount of students they take on.
Next steps
If you are interested in purchasing a purpose built student accommodation property or would like to know more about this particular interest rate beating investment option, then complete the form below to be contacted by one of our experienced investment consultants