For most parents, watching their children head off to college or university causes a wide range of emotions. Hopes and happiness are mixed with worries and sadness and the adjustment can be very difficult.
Emotions aside, there is also the weight of the substantial costs associated with post-secondary education. Tuition, textbooks, electronics, food and transportation can really add up, not to mention one of the most important expenses – rent. But what if you could make an investment – not only in your child’s education, but also in your overall financial portfolio? What if you could build equity while your child receives an education? Enter the concept of parent-owned housing.
Purchasing a home for your child and his/her roommates to live in while at school can be a sound decision. Not only will you receive investment income, but your child will learn many valuable life lessons along the way to help prepare him/her for what homeownership entails down the road. The idea also makes a lot of sense if you have, or plan on having, more than one child attend the same college or university.
Analyze all costs
Start by assessing whether the costs of buying a home outweigh the costs for rent over the course of your child’s program. In addition to the purchase price, don’t forget about maintenance, taxes, insurance and closing costs and, above all, don’t put yourself in financial peril just to make this a reality. As you did for your primary residence, you’ll want to enlist the help of a local real estate agent and a qualified mortgage agent. In addition, have a lawyer draw up roommate rental agreements, which will outline all expectations.
While you may be a little nervous renting to college-aged kids, it’s more than likely that your home will be well maintained. Your offspring and the roommates he/she chooses will be more inclined to take care of the property knowing who owns it and they may even be willing to undertake a few basic projects or simple repairs.
Another benefit is knowing where your child will be living for the duration of his/her college experience. You won’t have the aggravation of having to look for a new place each year and deal with rental agreements, waiting lists and security deposits. You have the freedom to choose a property close to campus with the amenities that best suit your child’s needs.
One important element to consider is whether you want to become a landlord and manage the property. If you aren’t able or willing to do the work yourself, you may want to hire a local handyman or a property manager, but don’t forget to factor this into your budget.
You’ll have a few years before having to make definitive decisions about what you’ll do with the property after your child graduates but, at some point, you’ll need to decide whether you want to sell it or continue to rent it to other students once your child graduates. The state of the housing market at that time will, of course, help with your decision.
Have questions about whether buying a home for your post-secondary student makes sense? Answers are a call or email away!