The rising cost of college tuition has been well documented, and many parents fret about putting their kids through school. Students are also left worrying about high levels of college debt, and how they will pay off those student loans once their educational goals have been attained.
What has been less well documented is the high cost of lodging for college students. While living in the dorms is one option, many students prefer to live off-campus, where things are quieter, and it is easier to study and socialize.
For this reason, some parents prefer to purchase a second home in the college town; a place for their child to study without worrying about things like rent. Before you call a real estate, agent and start looking for a second home, there are a number of factors to consider. Here are some things to think about when buying a home for your college student to live in.
Your Financial Position
Buying a second home in a college town may seem like a good alternative to rent, but make sure you are in the right financial position. You will need to carefully consider your own finances, including the amount of free cash you have and the size of the mortgage on your primary home.
Can you fully support the cost of an extra mortgage? Can you afford the ongoing maintenance costs and the price of any needed repairs? While it is fine to think about rental income, you will need to think about what will happen if your college-bound son or daughter is unable to rent out the property.
Know the Area
Familiarity with the area is another important concern. Do you know the area and its idiosyncrasies, or will you be learning on the fly? The better you know the area, the easier it will be to choose the right home; one that is in a safe place and one that will be easy, and profitable, to rent.
An experienced Realtor can help you with the information you need, so look for a professional with local expertise. You will want to know the conditions on the ground before you put your hard-earned money on the line.
What About the Summer Months?
When you buy a home in a college town, you need to think about not only the school year but the summer months as well. Will it be easy to rent the home to locals during the summer months, or will the property sit empty while your child is home from school?
Having a home sit empty for months on end can be risky, and you will need to be prepared for that possibility. During those idle summer months, the property could easily be damaged, either inadvertently or deliberately through acts of vandalism.
You will also need to maintain the property, even while it is sitting idle. Proper maintenance is the best way to preserve the resale value of the home, so you can get your money back, and hopefully turn a tidy profit when your son or daughter’s college years come to an end.
Even if you buy a great home in a bustling college town, it may take some time to see a profit. The value of houses appreciates at different rates, and a host of factors will come into play. You may have to hold on to that second home and rent it out for a few more years, even after your child is graduated.
In some cases, you may be able to use the home for your other kids, assuming they attend college in the same town. Your first college-bound student could also use the property for a graduate school or further studies, but those uses are not guaranteed. You will need to have a plan, so you can turn that second home into a great investment and not just a convenient place to live.