Are you sending your child off to college this year or taking them on campus tours before they make a decision on where to apply? While the quality of the education and affordability should be your primary concerns, you may want to consider investing in a second home by the school as well.
Sound crazy? Sound expensive? You may be surprised!
Here are five reasons to consider purchasing an investment property where your child goes to college… as well as a few reasons why you shouldn’t.
Equity And Tax Benefits: One of the main reasons people buy property in the first place is because of the financial equity that can be built over time. In addition, you could receive substantial tax benefits from the property while your child is in school and in the years to come. A tax professional will be able to tell you about potential benefits based on your own unique situation.
Safety: College dorms are typically safe, but what about off-campus housing? As the owner, any investments and upgrades made to the property will benefit your child’s experience and most likely the home’s value over the long-term.
The Bills Aren’t All On You: Assuming your child has roommates, the mortgage on the property will be subsidized by the other tenants, helping to decrease the overall cost of your investment.
Stability: The scramble for housing, on or off-campus, won’t be an issue or a distraction if you’ve purchased a property that suits your child’s needs.
More Affordable Than You Think: When you factor in what you’d pay for your child’s stay in the dorms or off-campus housing, you may find the cost differences to be minor, especially when you consider long-term equity on your investment.
With that said, buying an investment property timed with a child attending college isn’t the right choice for everyone. Here are a few reasons why you should consider holding off on the purchase of a home where your child attends school.
Is Your Child Committed To the School?: Sometimes, for various reasons, children change colleges. Typically this happens during or after their first year. We recommend waiting at least a semester before deciding on a purchase to help ensure it is near the school your child wants to graduate from. Waiting will also give you and your child a chance to explore the town and find the best possible area for your budget.
Is Off-Campus Housing Allowed?: Some schools have strict policies on when students can move off campus. These policies may make it difficult for your child to move into a property you intend to purchase and later on, for you to rent it to other students in the area. You’ll want to check the school’s off-campus living policies before deciding on the purchase of a home in the area.
Keep in mind that the tax laws surrounding second homes and rental properties vary by location. Consult with a tax specialist for their guidance before you decide to purchase a property where your child attends college.
Interested in purchasing a home for your child to live in while they attend college? Click here to find the HomeBridge office closest to you. HomeBridge is a national lender, so even if the school your child attends is out of state, our associates can still help you with your mortgage needs.
A consultation is always free and there is never any obligation to work with HomeBridge later on, even if you do decide to purchase a home.