Buying an investment property for your college-bound child

March 12 2018

As the costs of higher education continue to climb, some parents of college-bound kids are opting to buy investment property rather than pay for four or more years of dorm living and off-campus housing. Sound a bit extreme? It can make good financial sense when you consider the numbers. 
How does renting compare to investing in property?
The average costs for room and board for the 2017–2018 school year range from $10,800 for four-year public schools to $12,210 for private schools. Multiply that by four and you have a substantial amount of money that could have been invested in real estate. With buying a property, you can charge rent to your child's roommates, and even after they graduate, you can rent your property out to incoming students for steady cash flow. 
What are the pros and cons of each? 
It's important to do the math and consider what each option entails. With an investment property, you'll have another asset in your portfolio at the end of four years. With renting an apartment or dormitory, you'll have covered the cost of living during that time and nothing more. On the other hand, an investment property may have homeowners association fees and will require furnishings, utilities and maintenance. 
How do I know if it's a smart move? 
Buying a property for your child to live in while attending school is not a decision to take lightly. There are a variety of things to factor in and talk over with your trusted advisers to make sure it's the right decision for you and your family. 
Interested in learning more about how you can purchase an investment property for your college-bound child? Contact us today.

If you are considering buying or refinancing an investment property, please feel free to reach out to me to discuss our available financing options. Blueleaf is uniquely positioned to offer loan programs for 1-4 family investment properties as well as loan programs for all types of commercial property. Call me today if you would like to discuss!