Their children have a place to live that beats a dorm, but most parents see it as an investment – and a way to lower the total cost of a higher education.
NEW YORK – Homeownership can offer more long-term perks for college students than a dorm room, so some parents are stepping in to help college-age children buy a home in their college town. Real estate professionals told Bankrate.com that they’ve seen this long-held trend grow recently.
The reason it’s happening? Buying a home for grown children could cut college costs and be a solid investment.
Jeffrey Decatur, a real estate professional with RE/MAX Capital in Latham, N.Y., says his first parent bought a house for their first-year college student because the college didn’t allow students to have a car, and a home solved that problem. But then Decatur says he started to notice the trend more often, especially among medical and law students.
“Their parents wanted to make sure they had every advantage and weren’t distracted by other distractions going to school – and they had a place to focus and be quiet and study and what have you,” Decatur says.
Decatur says college students may pay about $6,000 to $7,000 per semester – or $14,000 a year – for room and board. So one of his clients used that $14,000 per year to invest it in a three-bedroom home for their college child, and they rented out two of the rooms for less than what the college would charge. When the student graduates, those parents can use the home as a rental or sell it.
Also, “if your kid’s taking out student loans, you’re not financing their living,” Decatur told Bankrate.com. “You’re taking $60,000 of debt out of the equation to your kid and turning it into an investment.”
Still, parents are left with the task of selling or renting after the adult child graduates. They also have to trust their child to keep up the property. But for many parents, the potential cost savings and a more private place for their adult children may be worth it.
Source: “Real Estate Expert Explains Why Buying Property in Kid’s College Town May Be a Smart Financial Move,” Bankrate.com (Aug. 16, 2021)
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