Investing in real estate within the Greater Golden Horseshoe will always be a lucrative investment. It should be long-term, especially if you plan on using this property to rent out to tenants as a passive income. This way, you can be certain that you will make equity on your property. However, there are many benefits to renting out your property to students in particular, and this is because the demand for student housing is strikingly high.
As detailed in the 2022-2024 Immigration Levels Plan, Canada expects to set record-breaking new targets for immigration. This Plan aims to welcome 431,645 permanent residents in 2022, 447,055 in 2023, and 451,000 in 2024. These are the highest targets set for Canadian immigration throughout its history. At the end of 2021, there were 621,565 international students in Canada at all levels of study, which means that in just one year, the country saw a return of pre-pandemic numbers from international students.
Additionally, there has been a 135% increase in international students in a 10-year period from 2010 to 2020.
Based on these stats, student rental investments are proven resilient to economic fluctuations and are known to be one of the most stable investment opportunities.
In this article, we'll explain the top five reasons student rentals are a lucrative opportunity for investors.
Reason #1: Location
One of the main reasons to invest in student rentals is that you can be open to location. There are many post-secondary institutions within the Greater Golden Horseshoe, which means that you have options to invest in pre-construction condos throughout the region. So, instead of investing in a pre-construction condo in an area that typically has higher real estate prices, such as Toronto, you can invest in other municipalities across the region.
Some examples include Wilfrid Laurier in Waterloo, McMaster University in Hamilton or Georgian College in Barrie. These areas are also great to invest in because of their location within urban growth centres (UGCs). Investing in UGCs means more developments will be built in these areas, including transit, employment, retail and more. Investing near a post-secondary institution, especially those within an urban growth centre, will remarkably increase the value of your property when you're ready to sell it in the future.
Reason #2: High Demand
As we touched on earlier, the demand for student housing is rapidly increasing, and most of this demand comes from international students coming to the country to pursue higher education. As more students enter the country to learn, the need for student housing will only increase. Plus, it's more than just international students that make up this high demand. Canadian citizens and permanent residents enrolled in post-secondary education are also looking for places to live near their schools. This increased demand means that student rentals will always be a stable investment.
Reason # 3: Higher Rent
The rental rate near post-secondary institutions could be higher because of the high demand. With the supply and demand issue that we've seen for over the past decade, many students cannot live on-campus after their first year, leaving many looking for privately-owned, off-campus housing. This is why many investors will purchase a pre-construction condo near a university or college because they know the demand is there — allowing investors to charge a slightly higher rent than in other areas. Plus, when you charge rent for student housing, you have the added benefit of charging each student per bedroom — an advantage you wouldn't get if you rented out your unit to a family.
Reason # 4: Market Resilience
Student housing is an investment that is resilient in times of economic downturn. In 2019, the international student population reached 638,300. In 2020, during the height of the pandemic, this number decreased to 528,200. Then in 2021, the number of international students rebounded significantly, with a 17% increase from the previous year, reaching 621,600. This shows that the student rental market can recover quickly despite the economic downturn brought on by the pandemic.
Additionally, the number of international students increased in a ten-year period from 248,470 in 2011 to 621,565 in 2021, reaching an incredible 150% increase.
Many international students choose to study in Canada due to its reputation as a safe and stable country, the quality of the education system and its multiculturalism. Additionally, 72.5% of international students have stated that they plan to apply for a post-graduate work permit, and 60% plan to apply for permanent residence. This is significant for the growth of the country's economy because these international students and permanent residents help fill skill gaps within the labour force. Investing in an economy that is in need of skilled workers means there will always be a demand for homes. So, if you purchase a pre-construction condo with the intention to rent it out to students, you can be sure that no matter the status of the economy, you will be able to save money on your investment.
Reason #5: Price Appreciation
Properties near colleges and universities usually maintain a higher price appreciation, and this is because other investors will be interested in buying a property around this high-traffic area. Properties close to post-secondary institutions will increase in value. The benefit of buying pre-construction is that even as the condo unit is under construction, the value of your property is increasing. If you choose to rent out your unit to student tenants, you can choose to sell at the right time and make a significant profit from your investment.
At GTA-Homes, our team of platinum agents will help you find the right investment property. To learn more about how you can benefit from the student rental market, sign up for our free Online Condo Investment Seminar, link below.
