Even if you don't have children attending college, you know that college is a lot of money. But if you have children who are about to attend college or who are already in college, you become hyper-aware of just how much it actually costs.
For those who aren't there yet, when you hear how much tuition costs, it often doesn't include room and board, meaning that in addition to the yearly tuition, you also need to include housing costs, which can be significant.
According to a recent article published by the Education Data Initiative, the average cost of room and board ranges from around $8,000 to just over $14,000 per year. The average cost varies depending on whether the school is private or public, and whether it's a two-year or four-year institution.
The average cost of a 2-year public school is $8,360. The average cost of a 4-year public school is $12,640. The average cost of a 2-year private school is $11,380. The average cost of a 4-year private school is $14,410.
However, these are averages, so the actual cost may be higher or lower depending on which school your child attends and the type of accommodation you choose (for example, the cost of a single room may be higher than living in a dorm room or suite shared by multiple students).
Either way, housing costs a lot of money, regardless of where a student goes to college or what their living situation will be. That's why some parents are buying investment properties for their kids to live in while they attend college, according to a recent realtor.com article.
But does it make sense?
Let me rephrase that… does that make sense to you?
There's no hard and fast answer as to whether or not it makes sense to buy an investment property to live in while your child goes to college. Sure, it may be a wise decision for some parents and students, but it depends on a lot of factors. If you're considering it, ask yourself these questions:
Will your child be allowed to live off campus? Some universities require students to live on campus, at least for a certain period of time. So even if your child is only required to live on campus during their freshman year, they can only use the investment property as a place to live for three years. Does the math work? Is buying a home actually more cost-effective than paying for dorms? Depending on your local real estate market, the cost of buying a home, or even just paying property taxes, can be more expensive than paying for a dorm room. Is it worth spending money on repairs and maintenance? It's nearly impossible to give an exact figure, but don't forget to factor in annual emergencies and upkeep. Is your child responsible enough to live in and manage their own home? Having your child live in their own home and pay for the day-to-day maintenance can be a great growing and learning experience. But for students who aren't yet ready for such responsibility, it can be too much of a burden (or at least a distraction) and affect their ability to focus on their studies. Do you expect other students to pay rent as well? One way many people justify the expense of buying a home is that they can defray the cost by having other students pay rent as well. If that is your plan, make sure you have other students your child can comfortably live with and that they are committed to renting there, and have them sign the rental agreement. It is easy for a student to say they want to live there, but they can easily back out or their parents don't agree to the arrangement. If you are counting on a tenant that won't work out, you could end up paying more than you would for a dorm room. Are you prepared for the potential risks and liabilities? I'm not saying your child is a party animal, but if you are completely honest with yourself, you probably know that wherever you buy, there is a chance that it could become a venue for keg parties. Unfortunately, parties can lead to problems and potential legal issues. Or will your child miss out on the socializing? On the other hand, living off campus could mean that your child is left out of the loop and the bonds that are created when students live together in a dorm. Of course, if you are not sociable, your child may prefer that… What if your student decides to transfer? Many students will transfer to another school after a year or two. What will you do if your child leaves the area? Do you keep it and rent it out, or do you sell it? If you decide to sell while they are in school, will it increase in value enough to offset the settlement, maintenance, and selling costs? It is impossible to predict how much (or if) a home will increase in value over a given period of time. Keep in mind that you may not see a profit once you are done with four years of college. Will it be easy to sell when your child graduates or transfers? It is also impossible to predict how long it will take if you want to sell your home, but keep in mind that if there are not many buyers in the area you are considering, it may take a while even if you decide to sell. If it does not sell quickly, prepare to hold it as a rental property and make a plan for who will manage and maintain the home after your child moves out of the area.
These questions aren't meant to discourage you from buying an investment property to live in while your children go to college, but to help you make an informed decision.
And if you think it's the right decision for you and your children, contact a local real estate agent who can recommend the most investment-savvy agent they can find in your child's school area to help you make the best purchase possible.
summary:
College tuition is expensive, and tuition fees do not usually include room and board, which can add significantly to the cost. The average annual cost of room and board ranges from $8,000 to $14,000, depending on the type of school and whether it is public or private. Given these costs, some parents consider purchasing an investment property for their children to live in while they attend college.
However, whether this makes sense will depend on several factors, including campus housing policies, the comparative cost of dorms versus buying property, maintenance responsibilities, whether you are prepared to manage your children's property, your reliance on rental income from other students, potential legal liability, social impacts on your children, and the future value of the property and how easily it can be sold.
These considerations are important in making an informed decision: If it sounds like the right choice for you and your children, ask your local real estate agent to recommend the most investment-savvy real estate agent they can find in your child’s school area to help you make the best purchase possible.