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 hostel 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.
Student housing is in hot demand. And students, especially rich students, are prepared to pay whatever it cost to get good student accommodation.
Guess what? Most tertiary education institutions in Nigeria are over-subscribed. That means there are tens of thousands of students per institution. In fact, many schools are so jam-packed that you wonder whether they are higher institutions of learning or road-side amateur schools. Some students even get to sit on the bare floor during lectures because of insufficient seats!
Student housing is ‘hot cake’ . Students are constantly seeking suitable student accommodation in areas that are close to their schools (Universities, polytechnics, and colleges of education) especially with the advent of online portals like Campusvilla Nigeria. Consequently, investing in student housing is a great way to grow your return on investment.
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.
Advantages of this Investment
Very High Rates : No matter the place be it rural or urban, institutions generate a lot of traffic especially in on session periods. The rush for hostels make the rent higher than most urban areas with the same square meter area of rooms.
Quick Returns on Investment : Students pay on yearly basis so you have money in lump sum that you can easily use to build or add one more room to the existing ones you have which you can easily rent out again to build more.
High Growth Rate associated with student populated areas is very noticeable
No Rent Owed : Your contract with students is usually also on yearly basis which terminates at the end of every session. You are paid before new tenants come in unless the present occupier can afford to pay you new rates which are usually added almost every year. The student sojourn is always short and transitory which makes it easy for you to increase your rent after he must have packed out.
There are a number of property investment options
available to the enterprising Nigeria property investor
interested in exploring the world of student housing.
And they include . . .
1. Investment in single room houses
2. Investment in partitioned single room houses
3. Investment in single room ensuite houses and
4. Investment in 1 bedroom flats
As mentioned above, single room student apartments are more popular than any other type of student accommodation available out there because of the inherent low rental price of single room student housing.
However, there are several variations even within this category of student apartments as the list above indicates.
For example, a building in Lagos Nigeria comprising single rooms is usually designed such that the single rooms face each other. That is, two rows of single rooms facing each other. Hence, this type of single room student housing is often referred to as “face me I face you” . For instance, a 10-room house built with this design will have five rooms on the left hand side and five rooms on the right had side. And this kind of building often share common amenities (or facilities) like toilet, kitchen, and bathroom.
However, since most students are people of little means, this student accommodation type is sometimes modified to meet the low income apartment needs of many students.
By splitting the individual rooms further into two equal halves using a two-face wardrobe. That is, a wardrobe with two sides is constructed in the middle of the room so that each occupant has access to one wardrobe each. Both occupants will, of course, share the use of the single door for the room.
Each person can install a curtain (that includes a central top-to- bottom zip) between the wall of his wardrobe and the wall of his side of the room. In this way, each student in this student apartment type can get some semblance of privacy in his side of the room.
On the other hand, a partitioned single room may generate 6,000 Naira per month per room (the two students per room pay 3,000 Naira each), 72,000 Naira per year per room, and rental revenue of 720,000 Naira for the ten rooms.
See the subtle but remarkable difference?
Over 50 percent increase in rental revenue with a small modification! These kind of ideas are certainly worth investigating. They help the property investor maximize the return from his investment.
10 baths and
Nevertheless, the home owner of his kind of student hostel or student accommodation can charge more for it because of the perceived higher value in the eyes of students or other category of tenants.
In Nigeria, 1 bedroom flat refers to a flat with . . .
1 living room
1 toilet and
These folks have plenty of cash.
They want to spend it!