Buying a student investment property in 10 minutes

By April 2008, the focus seemed to be on the market of Melbourne, which was starting to come out of doldrums after the overstocked Docklands area had been absorbed by immigration, migration and investors.

It seemed to me that although I couldn’t afford absolute beachfront near Melbourne itself, maybe if I looked down the peninsula town by town, I would find something suitable. So that’s exactly what I did with my research: seaside suburb by seaside suburb, I scanned the listings.

Eventually I came across the suburb of Seaford. I found a newly constructed townhouse and encouraged my husband, John, to fly down for a look. We had bought all of our other properties (apart from Harris Park) sight unseen. This time, I can’t really explain why, I just didn’t have the confidence to buy without viewing the townhouse and surrounding areas first.

The townhouse turned out to be quite small compared with the pictures on the internet, and John wasn’t keen to buy it. As he was staying overnight, he had some time to expand his search and he drove a little further down to the main hub of beachside Frankston. He thought this was probably better suited for investment.

After many weeks of searching and chatting with agents, putting in offers and not really getting anywhere, I was becoming obsessed with buying something in Frankston. All the talk suggested it was good to buy with the infrastructure and freeway plans.

I would surf realestate.com.au and domain.com.au every half hour to see if a new listing had come up. Finally, one Saturday afternoon, I decided to look one last time before I went off to have a nanna nap.

A new listing! The property looked fairly new and not that bad looking, located near Monash University and reasonably priced at $285,000.

I quickly called out to John and with the amazing power of Google Earth, we looked at the positioning of the property and were just amazed. It was directly across the road from Monash – and I mean, you literally walk out of the driveway and across the road and presto, you are at the university.   The next block over from the university was the hospital and one street away was a train station, which was only one stop from Frankston train station.

We called the agent, who happened to be in the car on his way to the vendor’s house to pick up the paperwork to list the property. The listing was so brand-new that the vendor hadn’t even officially signed the paperwork with the agent yet.

As we sat on the phone with the laptop in front us, with Google Earth showing us the highlights of Frankston, we probed the agent as to what that building was, what that large parcel of land was, asking how far away this and that was. John had a vague idea of some of the area, but looking from the heavens above gave a whole new perspective.

It turned out that this four-year-old, three-bedroom townhouse-style unit had been recently fully furnished with student desks, new mattresses, outdoor furniture and all that three young students could want or need. They were renting it on three separate leases, meaning the rent was great at $375 per week.

We looked at each other and covered the phone. “What do you think?” I asked John, “Should we put in an offer?” We shrugged and thought what the heck, so we offered $275,000. The agent couldn’t believe it – he was literally pulling into the driveway of the vendor’s house and wasn’t convinced we were serious. An hour-old listing and a 15-minute conversation with a buyer in another state and he had an offer on the table and was five feet away from the vendor’s front door.

I couldn’t stand it, it was so exciting and nerve-wracking at the same time. A few minutes later, the agent came back, our offer declined, so we raised our offer to $280,000.   After that I had to go next door for the comfort of neighbours and left the phone with John. Ten minutes later he came in and said it was ours at $282,500. It wasn’t much off the sale price, but it seemed like an opportunity and there was no time like the present to buy.

We were flying down in a few weeks’ time for a property conference in Melbourne, so we used this opportunity to complete a pre-settlement inspection. We met our lovely Chinese students, all studying to be accountants. They could barely utter a word of English, but I’m sure their studies are more important than partying.

The only downfall with student accommodation can be the potential lengthy vacancy periods at the end of a school year. In our second year of ownership, this has proved to be the case as we had two out of the three rooms vacant. It took nearly 10 weeks to have all three rooms tenanted, ready for the new school year.

The Facts

This is an exerpt from  Journeys Along the Property Path: 12 real life stories of 12 property investors, published by Inspirational People in Property. Two of the authors are fighting against breast cancer, and IPIP has aligned with the McGrath Foundation to raise money to fund McGrath breast care nurses in communities across Australia and raise awareness of breast cancer, particulary among young women. The initiative aims to sell 9,000 books in nine days to raise $90,000 to support the McGrath Foundation.