More parents buying homes for college-bound
Here are a few things to consider for parents who are pondering
a college-town home-buying decision for their kid(s):
Freshman restrictions: Some
schools don't allow students to live off campus their first year,
although housing crunches may spawn school-sanctioned exceptions.
Parental ownership of property in town might also get the restriction
waived. Call the university first before making a housing decision.
Also, consider that your freshman child may find it tougher to adjust
to college life while dealing with housing issues.
Cost, equity equation:
Weigh the annual cost of a dorm or apartment in the targeted town
vs. yearly mortgage and insurance payments and upkeep expenses on
a home you might buy. For that home's investment potential, consider
the quality of neighborhood and recent annual appraisal trend. Don't
forget, there is no equity in apartment or dorm rentals.
Economies of scale:
The profit potential is greater if your family has one or more other
kids coming down the college pipeline who are separated in age by
only a handful of years and could share the house, says Coldwell
Banker spokesman Chris Clark.
To sublease or not to sublease:
You can rent out spare bedrooms to other students but make sure
they provide references. "He's a really good guy" might
seem an ample endorsement in your child's mind, but maybe not on
your bottom line.
Home maintenance: "You
would expect your own children would take care of your place,"
says Realtor Moss. But will they? A lawnmower, edger and other equipment
will be needed. Depending on climate and complexity of landscaping
and your kid's school/work schedules, a lawn service might work
Will the kid cook?
Cooking at home will cut costs, but if your student always eats
out, there are still ways to economize. University meal plans, for
example, are usually available to off-campus students.
Furnishings and appliances:
If you don't have family furnishings to spare, arrive a few weeks
before school starts if possible and hit some summer garage or estate
sales. You might time this visit it to coincide with roommate interviews.
As for appliances, the more built-ins, the better.
too far from campus and transportation costs begin to weigh negatively
into the big picture. Ideally, homes not in walking distance to
campus should be near a bus or rail line. If you have to throw a
car into the picture, its payments, parking and insurance can skew
your cost basis.
Bill paying: If your
child is an economics or business major, he or she can probably
be relied upon to make a timely house payment and utility payment
to maintain your fine credit record. But the pitfalls of "probably"
may be worse than the old "assume."
Costs rising fast
In part due to cash-strapped state budgets across the country, college
costs are rising well past the rate of inflation. In 2007-08, four-year
public colleges and universities cost on average $6,185 and private
colleges and universities cost $23,712, according to The College
Board. Those prices are up more than 6 percent from the previous
At Purdue University, room-and-board costs are $7,930
per year, per student, double occupancy, for 2007-2008. At Reed
College in Portland, Ore., the school estimates room and board costs
of $9,460 for the school year, while at esteemed Johns Hopkins University,
on-campus room and board is estimated at $11,578 for 2007-2008.
Roughly a third of those costs are incurred through the university
cafeteria meal plans.
Don Romanek operates Whitehouse Station, N.J.-based
OffCampusNetwork.com, a nationwide database of rental-property listings
and information and services for landlords. He says he has seen
a huge increase in students seeking to share off-campus accommodations
to offset rising school expenses.
"Students can often share rooms or split the
rent in a single-family house for a lot less money than a college
dorm," he says. "Homeowners are also finding this an advantageous
market, because there is a solid market of tenants looking for housing
near the college.
"The idea of buying a rental property,
holding it for four or more years and having someone you can trust
on the premises to keep an eye on things is an excellent investment
idea," Romanek says.