Despite the rising costs for higher education, not all of these costs go directly to tuition, and there are steps you can take to offset some of the financial burden. For students who choose to live on campus, room and board can represent as much as half of their total college expenses. Often, after their freshmen year, students choose to live in off-campus housing that generally costs less than room and board on campus.
As a parent, you may still end up paying these bills for a time, and if you have more than one student at the same school, you may want to consider buying property for your college students. Buying a house for college students who are close in age could end up saving you money. Plus, you can avoid negotiations with a landlord and earn a little equity for your investment. Be sure to weigh the pros and cons of helping your college students buy a house. Then, plan ahead for what you'll do with the property when they graduate.
Depending on your situation, investing in rental property in a college town might be a good idea. It's a better idea if the area is home to large populations of two key demographics:
Be sure to investigate the area fully and talk with a real estate agent to better understand property values and typical rent payments. Since this is going to be their home away from home, you want the area to be safe and convenient to campus, grocery stores and other necessities.
Compare the cost of renting for four or more years to the cost of buying the property for college students. Remember that purchasing a property will probably require a down payment and closing costs, but this may still be cheaper in the end if you own the property for at least five to seven years. And don't forget you'll have earned equity as well.
When you take everything into consideration, the prospects of buying a house for your college student may improve if you have more than one child attending that college at the same time, and your student or students plan to be at the same school for more than four years.
While there are several benefits to buying property for college students, there are also important things to consider before purchasing the house.
What should you do after your students have moved out? Should you sell the property, rent it out to other students or find other, non-student tenants? Work with a local real estate agent to determine the home's value and what you might reasonably receive if you sold it now.
If you decide that you want to rent out the house, follow these steps:
Work with Citizens Bank to balance the mortgage on this rental property with your primary residence. We also offer a Family Loan that can be used when an immediate family member will be the occupant of the new property. Let us help you with home equity loans and lines of credit for home improvement projects you may need to undertake to keep up the property. You can discuss your borrowing and financing options with a qualified Citizens Bank home loan originator at 1-888-514-2300 who can help guide you through the financial process of buying a house for college students.