For some parents, buying a house near the university for their child to live in for the duration is a good alternative to paying for a dorm. But is it right for you? Here are 3 pros and 3 cons to help you decide.
Stability. Buying a house means that your college student will have a permanent and stable place to live for the duration of schooling. This can be a good way to help him or her succeed by choosing the location and lifestyle that fits them best. There will also be plenty of storage and space to work.
Fixed Expenses. College housing, rent, food plans and other expenses can change markedly from year to year. But with a purchased home, you won't have to worry about that. A fixed rate mortgage means that you can know how to budget for living expenses much more easily.
Investment. The house itself can be a good investment for some families. After you're done with college needs, it can become a rental investment property and provide additional income or a tax break (if there's a loss) against your other income. If the house is in a growing area, depreciation (even after just a few years) can also help you recoup a lot of your costs.
Home Ownership Costs. Obviously, owing a home comes with some expenses that renting doesn't. Be prepared to pay for things like property taxes, insurance, repairs and maintenance. Some experts recommend putting aside between 3.6% and 4.5% annually for maintenance and repairs, so factor this in when crunching the numbers.
Responsibility. Not all college students are ready to take care of a house. If you live far away, the student may need to stay on top of things like maintenance and minor repairs. And if you decide to rent out any additional rooms in the home to help pay the mortgage, the student may also need to help act as a landlord. So, be sure that your young adult is ready to be the "go-to" person on the ground.
Change of Plans. If your son or daughter decides to make a change in schools or plans during those 4 or 8 years, you may wind up having to unexpectedly sell the home. This can mean increased depreciation, an unpredictable real estate market and extra selling expenses.
If you determine if buying a college area house is the right call for your family, it's best to work with a local, qualified real estate agent with experience in the university area market. This way, you can not only find a good house for your child to live in but also the best investment to let your money work for you.
Contact a business, such as Charles L Moles Real Estate Services, for more information.