Worst Investment Ever (High Risk)
One London Rd, Stoke Student Accommodation.
Well what can I say, if the above was regulated by the FSA they would be classed as HIGH RISK INVESTMENTS, a few well known local agencies are now touting these as “great investment opportunities” so let’s break this down & see if we can see any great in this investment. Sale price £69,999 1 bed only, ground rent £350 annually & service charge usually around £2,000 conveniently not mentioned. They do offer a 5 year guarantee of 9% rental yield, though I honestly doubt this. OK so let’s do the maths average student accommodation like for like around this area is around £115 per week X 45 student weeks = £5,175pa, now minis your mortgage payments roughly £1,884 interest only after putting a 10% deposit down. Then you have ground rent £350, service charge £2000 not mentioned & now agent fees, you see where this is going? Almost £4,234 a year going out & that’s without agent fees or insurances etc, now I get a small profit here of under £2,000 pa.
See following link of like for like:
They mention that Newcastle Under Lyme has a student population of 27,000 ridiculous lie as Keele university has only 10,000, so that’s your catchment as you won’t get Staffs Uni Students living so far away. Now as a local agent I know this area is saturated with like for like apartments offering similar. Over supply springs to mind but they are happy to lie to you in order to sell you an investment that is high risk, in my opinion destined for trouble after the 5 years is over. Whilst we see a growth in these types of purpose styled student accommodation we also see the fightback of local landlord housing that allows groups of students living together & far cheaper, these types of landlords have upped their game, i should know I’m one. For the same investment money I could get you a net yield of around 14% that’s £800 to you per month or £9,600 per annum obviously minus your mortgage payments from this but as you can see it’s considerably better than the conceited investment been offered & it’s not high risk & certainly will not come with ground rent or service charges. It’s insane to think investors are buying into this load of tosh. For me these types of investments are not worthy of been in anyone’s portfolio. Avoid at all costs. A recent study undertaken with students & universities stated that this style of accommodation is unwanted & over supplies however, the corporates will not listen. There is a high risk of suicide in these self styled student apartments due to students being isolated within their one bed apartments.