If you have a child headed off to college in a part of the country that enjoys a much lower cost of living than your home area, you may wonder whether purchasing a small rental home in the area is a better investment than sinking thousands into room and board fees. In many cases, purchasing a college rental and obtaining a few roommates for your teen can help pay this unit's carrying cost during your teen's college career, and upon graduation, you (or your student) will have a tangible asset to leverage. Read on to learn more about the factors you'll want to consider when weighing room and board costs with the pros and cons of acquiring a niche type of rental real estate.
Will your student feel comfortable in this situation?
There are a number of ways around the "you're renting from my parents" awkwardness for your student and his or her roommates – however, if your teen has long struggled to become more assertive, putting him or her in a position where enforcing house rules and collecting rents are part of the job may be too much stress too early in the college process.
Even if your student is glad to serve as the rule-enforcer, you may want to set up a post office box or even a limited liability corporation (LLC) for rent collection to make it less obvious that the landlord is actually a tenant's parent.
How familiar are you with the area?
Some homes for sale can show beautifully but come with a number of unpleasant hidden surprises, while less photogenic homes may be passed over without a second thought. Purchasing in an area with which you aren't familiar will require you to enlist the help of a local real estate agent or savvy scout who can point out the desirable neighborhoods and school districts and steer you away from less safe parts of your teen's college town.
What are your resale options?
If you're planning to keep this home only as long as your child is in the area, selling it once he or she moves on to a new location, you'll want to keep resale at the front of your mind at all times. Real estate trends can be very localized, and purchasing a home with plans to sell just a few years down the road can be risky unless you've done your research and are confident there's enough buying demand to prevent your home from lingering on the market.
Alternatively, you may want to hang onto this home as an investment or even turn it over to your student to manage once he or she graduates. In many cases, continuing to collect rents from your college student's former housing can be a more profitable option than selling and pocketing the profits, especially if the college continues to maintain a high enrollment rate.
By mulling over some of these factors and discussing the options with your soon-to-be college student, you should be in a much better position to make the best personal and financial decision for your family.
Searching for a home a hundred miles away from where I was previously living was hard. There was no way for us to take a trip up to see every single house that we found online to see first-hand the condition that it was in and how big it truly was. I had to find a real estate agent that I could trust to help us find several houses to make a trip up to see in a single day. I created this blog after going through the buying process and making the move. It is my hope that if you are buying a new home far from your current one, that the tips here will help to make it an easy transaction for you.