University condo rentals a popular investment

After two semesters living in residence at Simon Fraser University (SFU), 21-year-old Emily McMann told her parents she wanted more privacy.

“Emily is quite independent; she found living in residence very restrictive,” says her mother, Linda McMann. “She told us that her friend’s parents bought a condo in UniverCity at SFU, so my husband Michael and I decided to look into it.”

In the end, they purchased a 600-sq.-ft., one-bedroom condo in the heart of UniverCity for $405,000.

“Emily has at least two more years and if she decides to do her masters, a few more years,” says McMann. “We also like that her condo is right next to transit, so we worry less when she goes out at night.”

McMann sees this as a win/win situation. “We consider this condo as a very good investment. Once Emily is finished her studies, depending on the market, we might pull out our equity or keep it and rent it out to other students.”

McMann’s realtor, Hafez Panju, has been selling condos at UniverCity for a decade.

He knows what a huge demand there is for off-campus housing.So much so, Panju invested in a 410-sq.-ft. studio condo, which he rents out to students.

“I realized what a great investment it was to purchase at SFU ... I just had to wait until I had more capital,” says Panju, of Personal Real Estate Corporation, Royal LePage West Real Estate.

In April 2016, Panju paid $230,000 for a studio. It was recently assessed at $305,000.

“I rent it out to an international student for $1,400 a month,” he adds. “I had 15 inquiries and it took less than a week to rent it.”

UniverCity has become increasingly popular, not only with students and faculty, but for families, couples, singles and most notably, investors like Panju. With a number of new additions, including schools, daycares, restaurants, grocery stores, hiking/walking trails and more, everything at UniverCity is within walking distance.

According to SFU Community Trust’s UniverCity 2019 report, renters at UniverCity are paying approximately $1,700 per month in rent (up from $1,500 in 2016), with the average size of a rental unit being about 800 sq. ft. Not a bad ROI (return on investment), says Panju.

It’s no wonder student housing is gaining more attention. Some are buying newly built apartment and townhouse condos targeted at this niche, or they are parents like the McManns, looking to find suitable lodgings for their university-bound children – all the while watching their investment property accrue in value.

“Many parents see that rents are high, so they would rather purchase a condo while their kids are attending university and then, once they graduate, they either sell them for a good profit or rent it out to other students,” says Panju. “The appeal for my clients, whether investors or parents is the same – it is a very steady and secure source of income.”

If you are still wondering whether it’s a good investment to purchase a condo close to a university, Jennifer Hunt, vice-president of the Real Estate Investment Network (REIN), will tell you “yes.”

“Whether as an investor or as a parent, if you invest in student condos, you don’t have to worry because there is always a steady stream of demand,” Hunt notes. “It’s an opportunity to own a piece of real estate that is revenue-generating from the moment you buy it.”

And, Hunt says, if the condo is large enough — say, two bedrooms — the extra room can be rented to other students to help defray the cost of ownership.

Vancouver-based Intergulf Development Corporation has been a pioneer at UniverCity since its planning stages more than three decades ago. The company built its first tower there, Novo, back in 2004.

“A community that would cater to students and faculty was a vision we embraced from the get-go,” says Shaadi Faris, vice-president at Intergulf. “The Terraces at the Peak is our third and newest project at SFU. All of our towers at SFU are purpose-built with students in mind. They feature quiet study and library spaces and rooftop gardens with tables for group studies, as opposed to what you normally expect in condo tower amenities, like pools and gyms.”

In the end, all four re-iterate the same thing: “At UniverCity, you have a constant stream of captive audiences for your product.”