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More parents buying homes for college-bound children

Kid going to college soon? Be prepared to pony up thousands of dollars for apartment or dorm costs, then have zip to show for it at year's end -- except for maybe a mini-fridge and a lament about poorly matched roommates.

The tuition dollars, at least hypothetically, will pay off some day. But the room-and-board bucks? Gone into school coffers or some landlord's bank account.

However, some savvy parents around the country are starting to examine that equation in a different light. As home values continue to spiral and interest rates remain at historically low levels, some moms and pops are buying homes near college campuses for their students, often renting out excess bedrooms to buffer the expense.

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Realtor Wally Berger of ERA Boston Real Estate recently got a call from a couple in Westchester, Conn., who have a son who would be attending med school at Boston University for the next seven years. The couple flew into Boston very early one summer morning for a one-day, whirlwind tour of homes and condos around stately B.U.

"They looked at 14 properties and by 2:30 in the afternoon, they said, 'We'll take that one.'" They chose a condo with a price tag of $450,000 and departed for the airport.

"It was a no-brainer for them," says Berger. "By the time their child is out of school, they can sell and put $50,000 to $75,000 in their pockets. They know they're not going to go wrong. And they don't have to waste money on an apartment or dorm all those years."

It was the fifth such college-area transaction Berger has made in six months in the Boston area, which boasts Harvard, M.I.T., U. Mass., Boston College and other prestigious schools -- and lofty rents ranging from $1,500 to $2,000 per month. "If you're going to spend that kind of money, then why not buy a place?" Berger says.

Dorms no nonger the norm
The parent-as-landlord practice is not a new one in college towns.

John Moss, a broker associate with a Coldwell Banker Residential Brokerage office in the Southern Methodist University area of Dallas, bought condos for each of his two daughters in Waco in the 1980s near Baylor University, but barely broke even when it was time to sell.

However, Moss and numerous other brokers are seeing a strong uptick in such sales. In the course of just a few hours following an informal Coldwell Banker e-mail query, at least eight of the company's Dallas-Fort Worth area agents said they'd handled similar deals recently.

Moss sold one fast-appreciating house directly across from SMU to a couple whose daughter plans to study at least four years there. "They saw the right house in the right location ... and ideally, they will rent part of it to other students and keep it for investment when she finishes."

Agent Rebecca Pearce, Moss' colleague, brokered a house to a couple who co-signed with their daughter, a Texas Christian University student in Fort Worth, who in turn rented out three bedrooms of the campus-area home and kept the fourth for herself. The rent fully covered her monthly house payment, Pearce says.

 

(continued on next page)
-- Posted: July 24, 2003
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