The speed of the Guelph student investment market is something that has always fascinated me.
Every year in the first week of January the floodgates open up and prime student rental properties start coming on the Guelph real estate market. There is a short 2-month burst of fury and excitement right up until the end of February and then the floodgates miraculously close yet again, only to let a few trickles out here and there until the next season!
Why does this happen?
The first reason would be the Guelph student rental cycle.
With the vast majority of student leases in Guelph running from May 1st to April 30th, any landlord considering selling their student investment property with vacant possession would have to give their tenants at least 60 days notice to vacate at the end of their lease, which presumably ends on April 30th of each year.
Prior to serving tenants a notice to vacate, most sellers usually want to have a firm deal in place on their property, so by the last week of February these listings slow down dramatically, coming to a near halt again until next season.
The second major driving force behind this phenomenon is the U of G parent investor. This type of investor has different motivations than your average investor, as they require the home for their son or daughter to live in as well, and more often than not require vacant possession.
Once March 1st comes and goes, the sellers of these student rental properties lose their ability to legally end their tenant’s leases at the end of April and provide vacant possession to a new owner on May 1st. Therefore, after the end of February it becomes much more difficult for parent investors to find a property with vacant possession on May 1st, hence the rush to purchase in January and February.
Now, in all fairness there are still student properties that come on the market after February and before the next January. The problem is that the inventory drops off drastically, and if you’re planning on renting out the other rooms to students, purchasing a student rental property off-season can mean having vacancies for a few months since you’re not lining up with the typical Guelph student rental cycle starting May 1st to April 30th. Renting rooms from September to April, or January to April is possible, or finding tenants to fill spaces in between, but for the most part renting May 1st to April 30th is ideally what you want to be doing as a student landlord in Guelph.
The point is, January and February are the two hottest months offering the highest volume of inventory, and they’re your best bet at finding a suitable rental property for your son or daughter and lining up your other tenants with the Guelph student rental cycle.
So, if you’re a parent looking to invest in a home for your son or daughter to attend the U of G next September the question is, “What should I do?”
1. Find a local Guelph realtor.
I see many parents choosing to work with an agent they know from their hometown out of loyalty to them, and I really do appreciate seeing loyalty in any industry, but unless these realtors were born in Guelph or have some sort of intimate knowledge of the Guelph real estate market, the Guelph student rental market, Guelph city bylaws, and most importantly where U of G students want to live based on location, bus routes, amenities, rents, etc. I really don’t see how they are adding any value to the equation.
Alternatively, if you are not currently working with a realtor and you figure investing in a Guelph student rental property is something you can do on your own, chances are it’s going to be a long, painful road and these short 2 months will almost undoubtedly pass you by just as you’re starting to get the hang of it. Having an agent represent you and your buying interests costs you absolutely nothing and you can be sure you have a trained, knowledgeable, professional realtor on your side, looking out for your best interests.
Things move fast in these short 2 months, really fast, and without the proper knowledge and guidance from someone who is on the inside track that knows which properties are the right purchase for you, I’m afraid the learning curve can chew up a lot of your valuable time and mean that you could be stuck investing in a home off-season if it’s something that you absolutely must have before next school year.
2. Get your financing in order and be strategic.
Having your financing in order before you even start looking is the best way to save time and eliminate properties you can’t afford. This also helps your realtor know which properties and areas are within your reach so they can make recommendations to you, saving you energy and frustration.
Having this piece of your financial equation figured out beforehand is an absolute necessity, especially when the speed of this market means many buyers are placing firm offers without conditions. I’m certainly not about to give you tailored financial advice here, and I would definitely advise you to never put in an offer on a property without a condition you are not comfortable having removed, but the reality is many informed and strategic parent investors are comfortable enough with their finances to put in an offer without a financing condition (or any other condition for that matter) because they’ve done this work ahead of time and are confident it will not be an issue. When a seller sees 10 offers come in on their property, and 4 or 5 of them are for over-asking price with no conditions, the chances are pretty slim that they are going to decide to work with an offer with any condition in it, even if it is for more money. In this extreme sellers market, more often than not a firm offer wins the race and having your finances sorted out beforehand can give you an advantage over the other buyers that haven’t done this work yet, or are not confident they can follow through with their financing on closing.
3. Be open-minded and willing to sacrifice.
Many people start off their search with one thing in mind and end up purchasing something entirely different. This happens for a number of reasons, but being open-minded allows for more possibilities, as it’s easy to get focused in on one thing and wait for it to appear. With such limited inventory in Guelph and such high, high demand for student rental properties, having your ideal, picture-perfect Guelph student home come on the market may not happen in these short 2 months.
The good news is there are plenty of other options if you’re willing to keep an open mind and decide up front which things are a “must have” and which things are negotiable. Again, working with a professional can save you a lot of time and energy here and can mean the difference between you finding a property that’s suitable to purchase or not.
At the end of the day, the speed of the Guelph student market is not something to be feared, and it can be overcome with the right kind of strategy and a few knowledgeable professionals working in your corner.
For the parents that are willing to commit to the process and trust in the help of a local Guelph realtor, the outcome can be very rewarding and you can find comfort in the fact that you’ve greatly increased your chances at purchasing the best home for your son or daughter to attend the next school year!
Until next time, Happy Investing!