Student Accommodation versus Tourist Accommodation
Demand for rental accommodation is high globally at the present time but this can make it difficult for investors to choose which route they should take. Both options, student and tourist accommodation undoubtedly have their benefits so it’ll probably depend on your own personal circumstances for which of the two is best suited to meet your needs. As with all investments, the investors goal will be to achieve the best return with the minimum amount of risk.
Student accommodation can take on many different forms from owning individual or multiple properties to investing via funds. Investing in a student accommodation fund such as those offered by Mansion means that you can invest for smaller sums of money, however these types of funds do potentially lack liquidity that can lead to trading being suspended (investors will be unable to sell the units that they hold) on occasions.
If you own your own student accommodation such as in the form of house you have the potential to earn some very exciting returns. However, your property may need to be divided up into individual living areas meaning that it is not appropriate for other uses and also the level of risk involved in terms of damage and defaulting on payments is high compared with other investments properties.
If you are considering investing in your own property to rent to students it may be wise to understand all the implications and the associated pitfalls that you may encounter along the way.
When it comes to tourist accommodation once again you have the potential to generate some serious returns but the downside is that the accommodation in question may not be in your ‘home’ country. This can have its advantages as well as its disadvantages with there being plenty of advantages associated if it is a country that you visit regularly or perhaps you are looking to generate returns in a different currency.
Both types of property can be managed on your behalf by agents so this can take away some of stress but this potentially can eat into your returns. In an ideal situation, what you are looking for is a fund or property that guarantees returns for certain period at a certain rate. This is possible although some investors are sceptical, especially with funds if they don’t have a physical property that they feel is ‘theirs’.
One excellent option that is available in the tourist accommodation sector is from the New Nordic Group who are based in Pattaya, Thailand. Their scheme has been in operation for the last decade and works by a developer building units that are intended to be sold as investment properties. Investors buy the units and ‘rent’ them immediately back to the developer who in turn sub-lets the units through long-standing agreements with domestic and international tour operators.
The New Nordic Group’s experienced management team take care of everything on your behalf and pay a return of 10% p.a. that is paid monthly in the same manner as rent into to bank account of your choice. The return is available for periods of between five and twenty years depending on which property you purchase and your own personal circumstances. You own deeds to property so you always have the reassurance that the property is ‘yours’.
Overall, although both options are attractive but the New Nordic scheme would probably suit more investors at the present time.