College and university residence spaces and local rental opportunities are tight in many areas with concentrated amounts of student population. That’s why it may be a great idea to consider buying a home for your child and their friends/roommates to live in while attending school.
Not only will you receive investment income, but your child will learn many valuable life lessons along the way to help prepare them for what homeownership entails down the road. The idea also makes a lot of sense if you have, or plan on having, multiple children attending the same college or university.
Expenses to consider
There are substantial costs associated with post-secondary education. Tuition, textbooks, electronics, food and transportation can really add up, not to mention one of the most important expenses – rent. But what if you could make an investment – not only in your child’s education, but also in your overall financial portfolio? What if you could build equity while your child receives an education? Parent-owned housing is definitely an option worth examining.
Your first step involves assessing whether the costs of buying a home outweigh the costs for rent over the course of your child’s program. In addition to the purchase price, don’t forget about maintenance, taxes, insurance and closing costs and, above all, don’t put yourself in financial peril just to make this a reality. As you did for your primary residence, you’ll want to enlist the help of a local real estate agent and a qualified mortgage agent. In addition, hire a lawyer to draw up roommate rental agreements, which will outline all expectations.
While you may be a little nervous renting to college-aged kids, it’s more than likely that your home will be well maintained. Your kid(s) and the roommates they select will be more inclined to take care of the property knowing who owns it and they may even be willing to undertake a few basic projects or simple repairs.
Another benefit is knowing where your child will be living for the duration of their post-secondary experience. You won’t have the aggravation of having to look for a new place each year and deal with rental agreements, waiting lists and security deposits. You have the freedom to choose a property close to campus with the amenities that best suit your child’s needs.
You’ll have a few years before determining what you’ll do with the property after your child graduates but, at some point, you’ll need to decide whether you want to sell it or continue renting to other students. The state of the housing market at that time will, of course, help with your decision, as will your experience with renting your property to multiple tenants.
Have questions about whether buying a home for your post-secondary student(s) makes sense? Answers are a call or email away!
