By buying a home for your child to live in during their college stay, you can turn what would’ve been a large expense into a lucrative investment.
Summer is officially over and school is in full swing, meaning college football season is right around the corner for us SEC fans. In north Alabama, this means there’s one consistent question everyone asks: “Roll Tide or War Eagle?”
Wherever your loyalty may lie, family ties to alma maters run strong here in the south, with many students deciding to continue their generational tradition when picking where they want to attend college. For most parents, sending your child off to college requires hours of preparation, a few kleenexes, and a substantial amount of savings. With tuition bills, book fees, everyday expenses, and more, a single semester can cost you several thousand dollars multiplied by however many years it takes your child to complete their degree.
For many parents and students, this begs the question, “Where and how can I stretch my dollar?”
One of the largest expenses of going off to college is housing, with the average cost of a dorm ranging from $10,000 to $11,000 annually, according to The College Board. With rent options often being cheaper than dorm fees, the majority of students decide to live off-campus after their freshman year. With bachelor degrees taking four or five years, or longer, to complete, some parents are opting to see if they can make the most out of their money by buying a college condo or a single-family home for their child rather than letting them rent.
Purchasing—rather than renting—can turn your dollar into an investment. This can also provide you and your child with a sense of stability and additional income.
In this scenario, we most often see the parent purchase a 2- to 4-bedroom home for their child to stay in during their college years. Most college kids don’t want to live alone, so they end up recruiting their friends to rent out the rest of the rooms in that property. This means they’re covering the note for the mortgage, cash flow is positive, and they’re not paying rent for their kid’s dorm room.
There are other additional perks we’ve seen our clients and friends utilize through this arrangement, including:
- Having two people share a room so that one room stays available so you have a place to stay when you visit.
- Eliminating the additional $500 +/- pet deposit.
- Not being stuck with your child’s pet after they graduate high school.
- Having the ability to upgrade the safety features of the property as you wish.
- Since their name is on the mortgage and deed with you, you can help your child build their credit and equity as they transition into their own careers.
In and around the majority of Alabama universities, most of the value of a condo or single-family home boils down to its location. Students often desire the ability to walk to class so they can eliminate parking fees and be near the action during a home football game. With the right location, your investment property could grow in value. Inventory in prime locations, though, is hard to come by, so buying a condo or single-family home for your child’s college stay requires the same amount of planning and responsibility as any other home purchase.
However, this is definitely a conversation worth having, especially if you’re like me and have children who are close in age and will likely choose the same university to attend.
If you or someone you know is interested in buying a condo or single-family home near university locations in Birmingham, Auburn, Huntsville, or Tuscaloosa, give us a call or message us online. We’d be happy to help you get started.
We want to extend a very special thank you to our clients and friends in the community who dropped by our office to donate to our Hurricane Harvey Donation Drive. The event was a huge success due to your generosity.