What is special about Waterloo?
City of Waterloo is located in Souther Ontario, Canada, with a population of 510,000. It's bout 1.5 hrs drive from Toronto. There are TWO universities in the city - University of Waterloo (UW) and Wilfrid Laurier University (WLU). As of 2014, UW has enrolment of 35,900 students and WLU has 16,000.
How has the market been?
Over the past decade, 8,000 new beds were added to the student housing marketplace in Waterloo. The rest of Canada, by comparison, has only 9,000 purpose-built student housing beds in the market. In 2010, UW, WLU and the City of Waterloo predicted that 34,830 new students would arrive in town. In actual fact, 38,985, did and of those students, 33,960 needed a place to sleep. The City of Waterloo, working with both universities, encouraged the growth of this high-quality purpose-built housing. The private developers stepped forward with 8,000 purpose-built student housing beds are now on the market.
Where is the market going?
University enrollments across Ontario is on the rise. According to the Council of Ontario Universities enrollment between 2008-2014 undergraduate increased at an average pace of 4.2% and Graduate full time enrolment increased at 5.5%. More importantly, International Students has increased to 11.2% of all enrolments from 7.4% five years ago. The City of Waterloo's Residential Rental Housing Licensing By-law (no. 2011-047) give city the ability to manage low-rise residential rental housing in the city, which have a large impact on driving students out of single family homes and smaller rental units and into larger multi student dwellings.
It is nonetheless a relatively large investment. However you own the underlying real estate with steady cash flow every month (lots of it.. approximately $600/month for each room in a 50 beds building... you do the math!). It is just like owning a condo in downtown Toronto for rental investment, but on a much larger scale.
Condominiums value is rising at 4% every year and the average cap rate for the investment is about 6%.