Room and board costs, along with tuition, are inching upwards. For school year 2007-2008 the average room and board cost for four-year public school was over $7,000, and for private schools that cost was $8,600. Already costs are up over 5% from last year.
There is an alternative, buying a condo or a house for your college student.
Buying a condo or a house for your college student can be a good plan. You might want to start with Realty Trac, which lists over 1.5 million Foreclosure properties, or ZipRealty, an online realty company that gives back 20% of their commission to buyers. Of course, there are things to consider before you buy.
Does your student want to live in an off-campus house? Off-campus living in a parent-owned house may have some drawbacks to consider before taking the leap. Some students might feel detached from the campus and become lonely. Some first-year students are required to live on campus—although that might work out for you, giving you a year to scope out potential buys. Your student also may not want the continued tie to parents that will exist when parents are landlords, and some students are not responsible enough to care for an owned property. After all, there can be a lot of damage done to college-town properties. Finally, what would you do if your student decides a year or two in s/he wants to transfer!
Is it really less expensive? If your student does want to live off-campus within the span of his/her four-year college stay, then you do have to weigh costs. Often in college communities competitive rents drive up monthly rent costs. In these cases buying a house in the same area can be less costly, and the equity accrued in areas where the housing market continues to survive makes buying a good deal. Still you have to figure on a 30-year set mortgage with 20% down, taxes, and maintenance. You had better do the math home work.
Consider your plan after your student graduates. After your son or daughter graduates, what will you do with your purchase? You may plan to use the property you bought for college living as a rental property. But, do you want to be a college student landlord? You will have a yearly turnover of tenants, annual repair costs, and possible landlord-at-a-distant issues. You may want to look into rental management companies. If you wish to sell your home, the market in a college campus area may be good. College landlords will be potential buyers, and retirees might also want to buy into college communities. You could even use this property as your own retirement home or second home. Make sure, in this case, that before you buy the community appeals to more than just your college student but also to you.
It is always wise to consider how to pay for and finance the cost of your student’s education. Be sure to be circumspect. There are numerous realtors and mortgage lenders to check out your prospects. It is also wise to check out foreclosure properties, as well, for your best buy.