{"id":21183,"date":"2018-05-20T01:00:56","date_gmt":"2018-05-19T15:00:56","guid":{"rendered":"https:\/\/realestatetalk.com.au\/?p=21183"},"modified":"2018-05-20T01:00:56","modified_gmt":"2018-05-19T15:00:56","slug":"student-accomodation-brad-beer","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/student-accomodation-brad-beer\/","title":{"rendered":"Student accommodation \u2013 Brad Beer"},"content":{"rendered":"<p><strong>Brad Beer<\/strong> \u2013 Chief Executive Officer of BMT Tax Depreciation joins us to provide his advice to investors who are considering investing in purpose-built student accommodation or planning on renting out their residential investment property to students.\u00a0 This is a huge opportunity as you will hear.<br \/>\n<strong>Transcript:<\/strong><br \/>\n<strong>Kevin:<\/strong>\u00a0 There are more than 71,000 purpose-built student accommodation beds across Australia\u2019s eight capital cities. That\u2019s according to the 2017 Savills Australian Student Accommodation market update. Despite this, demand for student accommodation far outweighs existing supply. That\u2019s according to Savills.<br \/>\nLess than 11% of the full-time student population accounted for in each of the major cities, with Canberra, the only exception catering to 28%. Given the shortage, many students look for alternative accommodation by renting from landlords who lent out regular residential properties.<br \/>\nToday, I\u2019m speaking with Brad Beer \u2013 Chief Executive Officer of BMT Tax Depreciation \u2013 who\u2019s here to provide us with his advice to investors who are considering investing in purpose-built student accommodation or planning on renting out their residential investment property to students.<br \/>\nGood day, Brad. How are you doing?<br \/>\n<strong>Brad:<\/strong>\u00a0 I\u2019m good. Thanks, Kevin. Great to be here as always.<br \/>\nLook, how I went through uni and I lived in shared houses and shared accommodations \u2013 a fair few years ago now \u2013 but was on the other side of this situation in the past as well.<br \/>\n<strong>Kevin:<\/strong>\u00a0 It\u2019s always been a hotly discussed topic, student accommodation. Are there any added benefits for investors who are considering investing in purpose-built student accommodation or properties that are located nearby, say, to universities?<br \/>\n<strong>Brad:<\/strong>\u00a0 I think two parts of that question from a depreciation point of view. Often student accommodation is furnished and therefore the deductions are quite high for what they are. Also, if it\u2019s a purpose-built student accommodation, they\u2019re normally a small bit of accommodation and the amount of plant the equipment and things in there as a portion of the overall cost is usually a high percentage.<br \/>\nSo, from a depreciation deduction point of view, they\u2019re actually often quite good as far as what you pay versus what deductions you get. Now, I\u2019ve never been one who says \u2018\u2018you should buy this one because of depreciation,\u2019\u2019 even though I\u2019m the depreciation guy. You have to consider all the rest of things about why you\u2019re investing in a certain type of property.<br \/>\nAs far as properties in areas around a university, I do own quite a few properties around a university area. I have a lot of property in the New Castle area. And I know one thing, for example, that I\u2019ve tried to do, is properties\u2026 Even though I\u2019m not necessarily always looking for the student as tenants \u2013 and not that I\u2019m against students as tenants \u2013 I\u2019ve had them as well in those types of properties.<br \/>\nOne thing I do try to do in those areas is that I understand that there\u2019s a lot of pressure on the market for rentals around the time at the start of the year, so all of my leases on those type of properties, I try to make sure they always end around January, so if anyone\u2019s thinking about moving out, I know. Even if I don\u2019t take the students, I have pressure on the market to maximize my rental out of those properties.<br \/>\n<strong>Kevin:<\/strong>\u00a0 It makes sense. Is it possible for you to provide us with an example of, say, the depreciation deductions, the comparisons that an investor can claim for the two different types \u2013 purpose-built student accommodation and renting out a standard residential property?<br \/>\n<strong>Brad:<\/strong>\u00a0 I did numbers on just a simple two-bedroom furnished\u00a0<strong>self-contained\u00a0<\/strong>student unit, should it be rented? And a lot of the difference here is the furnished versus not furnished in those numbers. But, something that is a two-bedder with $130,000 worth of deductions in time, over the period of time of ownership or from new to the end. So, not a high construction cost; it\u2019s the granny flat sized accommodation.<br \/>\nI have $7700 roughly in the first year, or unfurnished $6700. So, nearly $1000 difference probably in the first year on something like that, and then over the first five years, nearly $4000 difference in deductions. So, nearly $1000 per year for the first five years in deductions.<br \/>\nSo, it\u2019s a few dollars difference in using something for student accommodation there and furnishing it.<br \/>\n<strong>Kevin:<\/strong>\u00a0 So, what are the disadvantages that investors should be aware of?<br \/>\n<strong>Brad:<\/strong>\u00a0 I think the disadvantages\u2026 And I step out of property depreciation here because whether it\u2019s vacant or not or what it is, it makes no difference. But when considering any investment in any way, furnished rental properties have furniture, so you have to buy it, firstly, or have it there, so it costs and then also, things that like break down and there are more things for you to have to potentially fix.<br \/>\nThe growth out of these things sometimes is good, sometimes is bad. Who are your potential markets? It\u2019s mom and dad buying it for the kids to go off and go to uni, etc. So, the turnover and they\u2019re not something that often are held for necessarily as long. Summer breaks or holidays, they\u2019re possibly vacant for a bit longer. And if it\u2019s a student-only complex, you can\u2019t sell it off to an owner-occupier. So, potentially less demand for when you sell it, effectively.<br \/>\nBut we\u2019ve done a lot of depreciations and a lot of particular ones, over time that as people seem to be quite happy with the returns over time. But you just have to be careful of a couple of little things that relate furnished student accommodation.<br \/>\n<strong>Kevin:<\/strong>\u00a0 At the outset, I mentioned there about that shortfall in supply over demand. Are there any other impacts on the property market when you look at that?<br \/>\n<strong>Brad:<\/strong>\u00a0 Supply in those areas mean that around a university, if there\u2019s a lack of supply, it ends up taking up stock outside of rental stock that\u2019s within a few suburbs of that university. It gets taken up by people and it affects the overall market. So, we have to build enough to house the students when we build a university, or we end up with more pressure on the rest that are around that.<br \/>\nI know even one of the properties I have that\u2019s around there, for example, has an individual lock on every one of the single doors because it was an old four-bedroom house because they rent out those rooms individually to investors.<br \/>\nAnd what it does, is it just takes more properties out of the market so the other potential renters that were there, but it\u2019s a typical supply-and-demand issue that we need to deal with. When we build a university, we have to build something to house the people, right?<br \/>\n<strong>Kevin:<\/strong>\u00a0 That\u2019s right. Exactly. Hey, Brad, great talking to you, mate. Thank you for that insight. Brad Beer, of course, is the Chief Executive Officer of BMT Tax Depreciation. Thanks again, Brad.<br \/>\n<strong>Brad:<\/strong>\u00a0 Kevin, always a pleasure. Thank you.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Brad Beer \u2013 Chief Executive Officer of BMT Tax Depreciation joins us to provide his advice to investors who are considering investing in purpose-built student accommodation or planning on renting out their residential investment property to students.\u00a0 This is a huge opportunity as you will&#8230;<\/p>\n","protected":false},"author":176692471,"featured_media":21184,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[34,10,11,13,35,36,22,25],"tags":[101],"class_list":["post-21183","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-development-topic","category-property-investment-topic","category-research-topic","category-sponsored-channels","tag-podcast"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - 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