Investing in overseas properties requires attention to property price appreciation and rental market prospects. International students are a stable source of tenants, due to their low mobility and consistent demand; even during economic downturns, rental income remains relatively stable.
Moreover, international students typically have simple property requirements: properties should be conveniently located near transportation or schools, and the surrounding environment should be clean and quiet. Investors can renovate and upgrade apartment facilities to increase rents, thus raising property values as rental income grows.
In 2019, Centaline Investment purchased two apartment buildings in the United States through a private equity fund. One property was acquired for US$17.4 million and sold for US$21.25 million in 2022, appreciating by 22.13%. Another property was purchased at US$12.9 million and sold for US$18 million in 2022, achieving a higher appreciation rate of 39.5%.
At that time, Centaline renovated the apartments, transforming them into student housing, achieving impressive rental returns. Three years later, the properties were sold, generating a combined cash-out of US$39.25 million (approximately HK$310 million), with a net return of 30%.
Earlier this year, Centaline announced that it was exploring student housing investment opportunities in Ohio, targeting projects located near Ohio State University (OSU). The university has over 61,000 students, creating significant demand for student accommodations. Ohio has long been favored by the author as an investment destination due to its increasing attraction of large corporations and a growing influx of workers, thereby boosting local housing demand.
In addition to Ohio State University, Ohio hosts several other prestigious academic institutions, including:
- Case Western Reserve University (CWRU): A prestigious university that has produced 17 Nobel laureates, including the first American-born Nobel laureate.
- The Ohio State University (OSU): Among America’s top public universities, OSU offers programs covering nearly every academic discipline, particularly renowned worldwide in sociology, political science, economics, physics, astronomy, journalism, and communications.
- Kenyon College: One of America’s premier liberal arts colleges.
- University of Cincinnati (UC): According to the Yale Daily News College Guide, UC’s business school is the largest and has an excellent reputation.
Investors who wish to enter the student housing market need not invest tens of millions of dollars initially. They can start small, such as purchasing a house for student housing purposes, which requires approximately HK$1 million to begin operations in Ohio.
By renovating properties and enhancing apartment facilities to raise rental income, investors can achieve stable rental returns and capital appreciation. Once a property generates steady income, investors can apply for mortgage financing, replicate the investment model, and scale their asset holdings.
Author: Bonnie Wu, Founder of Capstone 72, US Real Estate
Editor: Yip Lai Man
Published on: July 20, 2023, 18:45
Original Article
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