Is buying a house in your kids college town a wise investment?
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Anonymous
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I had a few friends whose parents bought a home for them to share with roommates in college and law school. Essentially, the roommates paid the mortgage. The houses were held onto for the next sibling or sold, and everyone made a profit.
Question: If you were fairly confident that most of your kids would attend a certain school (let's use UMCP as an example since its local and many if you might be familiar enough to have an opinion), and you had 20% to put down, would you consider buying a place walking distance to campus? |
Anonymous
| Definitely. Depends on the area though, and not until at least sophomore year. Great investment for us in Clemson, SC. |
Anonymous
| Thanks, PP. We have a handful of kids who will very likely end up at the same state school (which is less than an hour from us). Since they will essentially be there back to back (with a couple overlapping years), I figured this would be wise. |
Anonymous
| What if your kids decide they don't want to go there, or get a scholarship to another school? What if they go but prefer to live in the dorms? I would not think this is a sure thing or necessarily wise. The house could get trashed, you could get stuck with the house when you want to sell it, and you might have to rent to other college kids after your kids graduate. The local housing market could tank, etc. Lots could go wrong. I'd tread very carefully and have lots of contingencies in place. |
Anonymous
| A friend did this when the kids attended school in Pennsylvania. It was much better than the dorms for the kids, who were too quiet for dorm life and also responsible and neat enough to maintain a house. They also got along well as siblings. That's a high bar, but it worked. The parents sold it after their second child graduated. |
Anonymous
| In response to 15:09 - Even if just the first ends up going there, I still think it might be worth it. Having said that, our four kids are being raised to understand that we have financial limitations and that they cannot merely select the college of their choice and expect us to magically foot the bill. $50k a year for room and board simply isn't an option. And since we happen to have an excellent state university that is quite reasonably priced, we expect our kids to go there unless they get a full ride or very close to it elsewhere. DH and I will not go into debt to finance $35-50k a year just to placate our children. (And I realize I'm coming off judgmental here, and that's because I know tons of parents who are shelling out $50k a year for kids who turned down full rides at state universities....so they could go to schools like Syracuse (and it boggles my mind that the parents allowed this)). |
Anonymous
Your tone is very judgy. While this plan is fine for you who's to say that another family has to follow what you do? |
Anonymous
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Hi, 15:09 again here:
Then given what you aid, I think you may have a much better possibility for making this work. It is that kind of discipline that makes a lot of sense. I don't think school debt to placate kids is a good idea either. That said, i would still weigh the decision carefully. If you have 20% you can put down, are you prepared to that that money tied up longer than you might want or become a distant landlord for longer than you might want? What you are talking about is still a risk, and one you don't have to take. I would weigh it in turns of other options, e.g., what would that money make if it were in stocks instead? And would it really save you money over the kids renting another place or paying for the dorms? |
Anonymous
| I know people who have done this successfully, but there is no way that I would be a landlady to my kid and her roommates. No way. |
Anonymous
+1 I say this with 20+ yrs or Landlord experiance. I also want to add that if the area is a more than a 45 min drive away, you might find it to be a huge hassle. |
Anonymous
| My sister and I attended the same university as my parents, about 2 hours from where my parents currently live. My dad bought a house in the college town and my sister and I lived in it (never together, but with a 2 year gap in-between). It was a 3 bedroom, 2 bath so it accommodated my roommates well. They have had no trouble renting it out since none of us have needed it since. They are intending to retire to the house in the next 5 years. For them, it's been a great investment. By the time they move in, they will have 15 years of mortgage payments made, and none of them paid for by themselves. They will be able to pay off the home in one lump sum when they sell their current house and move in. It's a perfect situation. You may or may not have great luck doing the same. |
Anonymous
| My BIL did that. It didn't work out as they had difficulty selling it at the end and sold at a loss. They bought it thinking they might retire there but then separated/divorced before that could happen. |
Anonymous
| It took my parents 12 years after my sister graduted to sell a condo that they had bought for her in Clemson SC, but it was never vacant during that time, and the management company handled everything, so it was purely a financial investment for them (unlike rental property we've owned that we managed). They made a few grand in appreciation, plus the equity. Of course, a house would likey sell quicker, but involve more work, and I would be nervous about renting to students. |