Making money by building student hostels

 BY ABIODUN DOHERTY

Abiodun Doherty

One of the ways of making money in real estate in Nigeria is by building student hostels. Nigeria, with an estimated population of 170 million, has the largest population in Africa and still counting. The educational sector has been consistently underfunded and the infrastructural deficit is alarming. Apart from the lack of adequate, quality and modern equipments, books and sufficient number of qualified manpower, there is also lack of adequate infrastructures such as student hostels in most of our higher institutions. Only few higher institutions, both public and private, can boast of sufficient accommodation for all the students willing to live on campus. This gap has created opportunities that have made some investors rich.

In another vein, this short fall in the provision of student accommodation by higher institutions of learning is not peculiar to Nigeria. Almost in all nations, there is always the choice to live on campus or to secure private hostel accommodations. The student rental market is thus an international opportunity. The reason being that provision of student housing is not seen as a core business of educational institutions   compared to other pressing needs such as research centres, lecture halls, creating new departments and provision of libraries. Tactically, by providing few hostel accommodations such institutions have ‘outsourced’ their accommodation to private investors like you who can turn it into a cash flow machine.

If you own a property near a college or university or you have the opportunity of buying a property near a college, polytechnic or University you may consider making it into an off campus student housing. This type of property often generates good cash flow and you could earn more than the average rent per room in the area. Students are often their parents or guardians responsibility and as such could afford to pay good rent since it is not coming out of their pocket. They love good things and their parents or guardians prefer safe and secure environments even though expensive.

Of course, renting to students has its own draw backs. Typically, your tenants are young and brash and need to be well regulated. They also have the reputation of being noisy and rough meaning that your property could require more regular maintenance. They are also very social and although you rent your accommodation to one student he may have what they call a ‘squatter’ and the squatter may also have a ‘floater’ all in that one room!

Also, because of the nature of their academic programme there would be periods when your property will be vacant. Another issue could be their relationship with neighbours. If, for instance, they do not have adequate parking spaces for their cars, they’ll take advantage of the spaces in front of other houses in the neighbourhood.

However, they also have a lot of things in their favour. All you need to do is to follow a few general rules and also visit existing facilities like the one you want to set up and make discreet enquiries. You can also discuss with student leaders and lecturers on campus and they’ll give you a general idea of working strategies and practices as well as referrals to reputable facilities run by others.

One good fact is that students would not remain their forever and by the nature of their programme you should make their rental term not more than a year. Always insist on a security deposit. If you collect rents annually, you’ll not lose any money during their vacation period and their security deposit should caution them against damages to your property.

You should have clear rules and regulations on common areas, noise and payment for utilities. Ensure that you have accurate data on their parent/guardian and their faculty/department. A resident manager who is experienced and disciplined is necessary if your facility is big otherwise your property manager can visit once in a while. Make it clear that all forms of illegal activities or fracas will not be tolerated and are causes for immediate termination of their lease and eviction. Maintain a reputation for quality and discipline and your facility will generally attract the best and at a premium.

Source: Punchng.com