For University of Guelph students’ parents, after a first year perhaps in residence, it becomes time to ponder the next step when it comes to living arrangements. And, looking ahead to three or more years of helping their kids with rent and moving expenses, often the numbers add up to a logical conclusion: it probably would make more sense to buy than to rent. If you can find a way to manage the purchase of a rental property, it’s a smart move. Buy something modest and have the mortgage covered by rents, while year over year the property gains equity.
The High Season for Buying & Selling
For parents wondering what the Guelph student rentals market is like … well, it’s pretty predictable, year over year. In Guelph, the overwhelming majority of students lease on a 12-month basis, from May to May. Students are out in full force early every January and into the end of February in pursuit of a place to live. Our vacancy rate for rentals is extremely low, so these students are wise to get a jump on the home search – or they may have to take what they can get later on in the year.
Because January and February are months when the students are out in large numbers looking for housing, it’s also the period during which the market for Guelph student rentals booms. It’s about a two-month ‘blip’ in home values for properties that are suited for students, and it happens every January and February. Competition is fierce, values spike sharply, and many of us sit back and marvel at how much people are spending on these properties which – even a month before – typically sold for quite a lot less.
In the course of working with parent investors over the years, I’ve most enjoyed the times when we’ve been on the hunt for Guelph student rentals outside of this peak season. Last year, I helped a client buy a home for his son that closed in January. It meant some months of floating the property without income, but he knew that competition in the high season might price him out of the market. He bought in December and closed in January. Within 30 days, virtually identical properties were selling for $40,000 more than his. Before he’d even started to fix up the place, he had significant equity gains.
Strategies to Avoid Overpaying
His experience is far from unique. There can be a lot of merit to buying in advance (or after) the investor-season madness. Longer closes when purchased before – or fast closes when purchased after the season has come and gone… these are among the strategies that I’ve used to help my clients secure a great investment at a fair price.
So the real question is… why wait? Why wait for the competitions and soaring prices – when you can buy Guelph student rental properties in a balanced market and achieve the same outcome: a great place for your kid to live, and a smart financial investment for you. Because, let’s remember, as a real estate investor you make your money on the purchase. If you over-spend on the front end, you’ll always be playing catch-up when it comes to equity gains. Overpaying can lead to serious disappointments when, down the road, you’re looking to sell the property and your profits are less than you’d hoped. For that reason, buying at an off-peak time can make a lot of sense.
When Time Comes to Sell
On the flip side, the goal is to take advantage of those ‘blips’ and high periods. So if your rental property is going to be widely-appealing to parent investors, often that new year rush is the optimal time to sell. Buy Guelph student rentals outside of a wild market, but do your darndest to sell them within it!