It’s pretty common to hear about parents renting an apartment for their kids while in college but would you buy a house while the kids are still in high school or even middle school??
Apparently some overeager parents are buying their college-bound kids houses and apartments near some of the top schools in the country, way before they’re even accepted.
Real estate agents are saying this trend is becoming more popular among parents with kids as young as 13-years-old with aspirations they will one day attend prestige schools like Harvard or Yale. Other parents say this trend is ridiculous and unnecessary that a child should be supported other ways like working hard not by giving them apartments and houses.
While those may be extreme cases, there have been reports that lots of parents are considering purchasing a piece of real estate near their kid’s colleges campus.
According to a new survey from top real estate agencies, between 30-45 percent of the company’s agents have seen an increase in parents purchasing homes for their children to live in while attending college over the part few years.
This could have its upside. It could wind up saving you money on campus housing and rent in the long run.
If you’ve considered this, there are a few things to keep in mind, however. Every real estate investor knows that college campuses are hot spots and to make things better (or worst for others) prices have been climbing in the last few years and that’s a no brainer.
- Compare expenses: It’s number one because it’s one of the most important. How much are you really spending for your child for the next 4 years? You have to think about the costs of campus housing and the rent you or your kid may pay when he or she moves out of campus. The next step will be to calculate the costs of buying a place and renting it out. That will give you a strong financial picture of the costs.
- Is your child mature enough to handle a piece of property? If you’re buying a house or apartment, chances are your kid will be sharing it with roommates to help with utility bills. That can both lower the cost and provide an affordable home for other students. Your will have to be tough with other roommates since bills have to get paid and the living environment has to be clean. So what happens when your child doesn’t do what he or she needs to do? Are you close enough to the property to set things straight?
- Can you afford to buy something reasonable for child to live in? Keep in mind that houses or even apartments near colleges are not as cheap as it once was. Back-in-the-day property was way more affordable. So if you cant afford something you actually want your kids and their buddies to live in, move along.
- For how many years will you have this investment? Most college students go to college for 4 or 5 years but there’s also the students that go to med school that need an extra 4 years on top of that. If you’re making this investment, its going to be for a short period of time, unless you’re going to keep it and rent out to other college students after or you have another child following in his or her sibling’s footsteps. Think about an exit strategy and how you’re going to profit from this investment. Also, don’t forget to think about the lost opportunity cost of the capital.
- This should definitely be #1 on this list. When it comes to our children we always want the best for them but things don’t always go our way. One way we could protect them is by thinking ahead like getting them a house near campus but how about if the property has a bad history? We could be setting them up for disaster. We did some research and found a company called Local Records Office that offers property history report. Think of it like a CARFAX but for your property. Instead of going in blind folded you could know more of it’s past.
In the end, this investment may not be about “making a few bucks” as much as it is about spending less than you otherwise would have to shelter your child during college.
