by Katie Dunkle
If you have or will soon have a child attending college, no one knows better than you about the rising cost of a college education! One related cost is student housing, but let’s face it- if your child is accepted into his or her dream school, will you let student housing issues get in the way?
The College Board reports that the average cost of room and board for the 2007-2008 academic year for a public college or university has risen 5.3% to $7,404. At that rate, you could spend over $41,000 on room and board in five years, the average time to complete an undergraduate degree today. It makes sense for you to consider alternatives. Forward thinking parents see the benefit of purchasing a modest home for their child to live in during his or her time at school. With more students than ever taking 4+ years to complete their degrees, it makes sense for parents to consider the advantages.
How does one determine if it is right to forego the dorm experience and make a real estate investment that will help meet both short and long term goals? First and foremost, think about the child. Is homeownership a good alternative for him or her? Homeownership requires a level of commitment to maintain and protect the investment. Parents and their children need to fully accept that commitment. If they do, the next thing to consider is the local housing market and conditions.
Compare the cost to own vs. the cost to rent. Could your student get a roommate to share the costs? Next, consider how long you are likely to hold the property. If your student intends to graduate in 6 years or attend graduate school, the rate of return could be very attractive, especially if a roommate has been paying for 1/2 of the mortgage.
After graduation, you may want to consider renting the property to other students. If that is the case, you would want to weigh the options between being a college town landlord and having a property management company handle the marketing and leasing arrangements for you. If you do decide to hold on to the income-producing property as an investment, you should factor in whether the market will support short or long-term leasing when calculating your overall rate of return.
The desire to downsize is quite common for empty nesters looking to simplify their lifestyle with a smaller home and enjoy the vibrant community and amenities often found on or near college campuses. Some parents will purchase their son or daughter a townhome, condo, or single family residence for the child’s use whil completing his or her education with the intention of moving into the home themselves as their retirement nears. This is particularly appealing if the parents are alumni themselves.
Finally, if after consideration, this is something that a parent sees value in, the next step would be to consult their child. Would he or she be comfortable with the arrangement? One should also check with the school to make sure there are no rules prohibiting a student from living off of campus. Many colleges and universities require their freshman live on campus.
The agents at Buyers Advantage Group Realty are knowledgeable about alternative student housing options in and around all of our local college campuses:
Call us if you would like to learn more about investing in student housing opportunities.
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