The coronavirus pandemic has brought with it rapidly, unprecedented economic turbulence. Its sudden grip on Canada and its citizens has created a sharp economic downfall the likes of which have never occurred in the country’s history. Some have already started calling it a recession.
Table of Contents - Students Need Government Funding During the Pandemic, Real Estate Investors Concur
Normally, a recession would be the perfect opportunity to pursue higher education. But this pandemic comes with unusual circumstances that make it difficult to both acquire a new job and go back to school. As young Canadians consider their next move, now’s the time for real estate investors to act.
Take a look at past recessions
In the 2008 recession, many young adults preferred to stay in school rather than try their luck in the job market. The numbers are staggering—nearly half of the undergraduates went on to pursue a master’s degree, and a third of grad students went for their master’s or higher. Their prospects were bleak if they attempted to start a career at that time. It was best to gain marketable skills through further education and wait for the storm to pass.
The United States also saw increased enrollment, but older adults led the surge—individuals laid off from their jobs. Workers returned for additional postsecondary education or trade schools to expand their skill set and improve the chances of finding gainful employment a few years down the road.
The resulting migration back to school created a unique opportunity for property-focused investors. An influx of students meant rising demand for student housing, which drove property prices higher around universities. Investors saw not only a boom in property prices but were able to charge students more without fear of losing out on prospective tenants. It’s an opportunity that could be coming back around again with the coronavirus pandemic.
School is the best option right now, and so is student housing
Postsecondary education has benefits other than simply waiting for the economy to heal. Students have the advantage of exploring new subject matter, which makes them appear more enticing to employers and leads to better job opportunities. Many businesses aren’t looking to hire during a recession, but these returning students will be the perfect candidates once the job market bounces back. Plus, their starting wages are likely to be higher. Schooling now unlocks opportunities later.
As they return to school, students aren’t shy about accruing debt toward the promise of future wages. Part of that debt is devoted to housing. As they take out student loans and borrow privately against costs like tuition, food and housing, many students are budgeting to live close to campus. They’re ready to pay rent—they just need accommodations that meet their needs and expectations. Investors acquiring and improving student housing are poised to see an influx of opportunities as the COVID-19-inspired recession trudges on.
Coronavirus prevents a return to education
While student housing is an enticing prospect during the coronavirus pandemic, don’t forget that it’s still a public health crisis. That means student rental investors also face unique headwinds. The current economic turbulence is jarring and unlike previous situations for many reasons. It’s not as easy this time around for students to pursue an education, due to social distancing and university shutdowns.
Back in March, universities had to organize a makeshift online curriculum that was too last minute to be a proper substitute for in-class learning. Students have begun to put their postsecondary plans on hold because they don’t feel comfortable paying full tuition while missing out on a traditional college experience.
Schools like the University of British Columbia and McGill are also moving the fall term online so they have more time to reform online learning. UBC said an extra semester of lockdown will hopefully be enough to improve the quality of digital classrooms and boost enrollment. For investors in student rentals, a shift to online learning can be a huge hit to demand. Without the need to commute to close or attend physical lessons, students may also decide to live at home or further from campus.
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What can the government do to help?
Governments must stand up for postsecondary education by increasing funds and creating incentives for people to go back to school. Despite the coronavirus, this recession has something big in common with all the ones that came before: education provides a better future. Government funds are what brought universities to fruition, and those same funds are necessary for helping universities stay afloat.
Similar to previous recessions, undergraduates and workers who lost their jobs want to continue their schooling. To entice these prospective students, universities require a well-constructed plan for a return to the classroom. Moreover, stimulating a return to school will also prop up the secondary housing market affiliated with student rentals.
Not only is this a boon to investors, but it’s also an opportunity to get money flowing within those communities again. People shop, eat and pay for services where they live, and if they live closer to campus, there’s even more opportunity for commerce. While it’s not entirely altruistic for student rental investors to call for the government to aid schools, it’s fair to say that stimulating education has far-reaching benefits for the entire community.
There’s a demand for schooling now more than ever
Shutdowns and social distancing guidelines shouldn’t prevent young adults and workers from pursuing an education that will better their chances of finding a job. Returning to school is better for the economy in the long run than attempting to navigate a tattered job market. Enrollment rates should be flourishing instead of fizzling out! And, as the Canadian government ponders aid to help schools reopen classrooms, savvy property investors will turn their attention to the many opportunities of student rentals.
Gillian Irving is a real estate investor who specializes in student rentals that create passive long-term income for her family as well as her joint-venture partners. For her FREE Property Analyzer/ROI spreadsheet visit https://www.InvestInStudentRentals.com
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