If you have a child in college, no doubt you’ve experienced the severe sticker shock that comes with higher education. There’s little you can do about rising tuition fees, but what about room and board?
One option is generally overlooked: Sometimes, buying property in the college town can lower your costs-and provide a lucrative investment down the road.
Consider Tom K. Wilson’s story, as related by Boston.com. In 2001, the electrical engineer-turned-real-estate investor purchased a three-bedroom home in San Luis Obispo, so that his daughter could live there while attending California Polytechnic State University. He paid $385,000, plus another $10,000 to add a bedroom. His daughter shared the home with roommates.
Six years later, Wilson sold the house for $760,000-nearly double his initial investment. The windfall covered the entire cost of his daughter’s undergraduate education, including housing, as well as a down payment on a home for her graduate school attendance.
Such risks aren’t for everybody. “Not all parents want to complicate their children’s lives with logistical challenges like collecting rent from friends,” notes the website.
But many feel that a home purchase can lower other logistical challenges that come with renting, such as avoiding “late-night noise, shady landlords, unsafe conditions and inflexible move-in schedules.”
Recently, notes Boston.com, the home improvement website Houzz took a poll of 1,050 people, asking if they had purchased real estate in the town or city where their child attended college. More than half answered yes.
While some noted that they wouldn’t do it again, due to the hassles of upkeep, others reported that they went on to invest in additional properties on college neighborhoods.
As for Wilson, he notes that college markets are a good bet, as they present a relatively stable supply of renters. “I think it’s a good play,” he said.
In the end, it depends on the housing market in the town where your child will be attending college vs. the cost of dorm housing-and your child’s ability to manage the situation.
And if purchasing a home doesn’t work out, there’s always this alternative, promoted by one Houzz user: “I’ve just decided I’m buying our child a used RV for college housing.”
Let the good times roll.