Buying Home vs. Dorm for Students
An increasing number of parents of college-bound offspring are purchasing a condo or small house in the area of the college for their student’s residence while attending the college or university. In some cases, it appears to be more cost-effective than paying for room and board in a dorm.
An increasing number of parents of college-bound offspring are purchasing a condo or small house in the area of the college for their student’s residence while attending the college or university. In some cases, it appears to be more cost-effective than paying for room and board in a dorm. The student will often rent out a portion of the unit to another student to minimize the investment. When the student’s attendance at the college is completed, the unit will be sold, hopefully at a profit.
There are now about 3 million campus houses and condos that have been purchased by students or their parents, according to a report from the National Association of Realtors. That represents about 8 percent of the nation’s 37.4 million investment properties, but excludes 6.8 million vacation homes. In addition to the possible financial advantage, owning such a residence gives the student more freedom, and a choice of roommates. For parents, it offers a chance to recoup some of the rising costs of higher education, assuming it turns out to be a good investment.
Many parents are spooked by the unknowns in such an arrangement. Can the extra space be rented at the projected rental amount? Will the student handle his extra freedom responsibly? Will the property later sell at a profit? I would be happy to help you sort thru the pros and cons to buying this type of investment property, or if you would like a free Comparative Market Analysis on your home, contact me at (425) 241-9400 or Sheila@LawrensonHomes.com
A good option. One that I had never considered. Thanks Sheila.
Dan Mehaffie
Your very welcome, if you would be interested in additional information I would be happy to help.
This is certainly a great time to purchase, lots of inventory to choose from, prices are down and seller are motivated!
Purchasing a condo or house for a student in college can be a very good decision – or can bite you in the butt. Not only does it depend on the current (and future) market, but also on the (often unpredictable) stability of the student.
I admire your optimism, but do you honestly believe that now is a great time to buy a home? Would/do you recommend that to your relatives? Are you in the market for investment properties?
I have a 23 year old daughter, she is actively looking to purchase her first home. I am helping her with downpayment and closing costs, does that qualify?
Wow – that does qualify! Is she shopping locally? I’d love to be a fly on the wall to observe that process and what she ends up doing …
I’ve been telling my clients that it is a good time to rent and get real familiar with the market – I believe the best deals will still be at least a couple years down the road.
BTW – you look much too young to have a 23 year old offspring. You must have started when you were about 7 and/or you have discovered the fountain of youth!
I agree, if she’s 23, you know that over time the market will bounce back!
In addition it’d be great to save all that money on rent over the four years or more of college. I strongly believe that Bellevue is at it’s lowest point, and it will be a very strong real estate market a year from now.
How much appreciation would it require for buying to be better than renting while going to college? Would it still pencil out if there was a net depreciation in the value of the property once you achieved your degree?
In other words, are the tax benefits, and so on, substantial enough that even if the value of the property declined 5% to 8% over a 4 year period you would still come out ahead?
That’s a great idea! While some colleges/universities require students to live on campus for the first year, you can certainly rent it out during that time.
Financial planners have been suggesting buying a condo or home near a college for years as a wise investment. If you are lucky enough to be able to know where your student will be attending 1 or more years in advance, that is best. You can always count on a steady stream of student tenants before and after your student attends (as long as you are comfortable with “unique decor”, possibly loud colors, etc…)