Buying Real Estate for Your College Student’s Housing

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Posted on July 9, 2018 by Laura Lucky

Paying for college tuition is expensive enough, let alone the exorbitant costs for campus housing. If you have a student living in a tiny dorm room, or even in private off-campus housing, the idea of owning your student’s property and forgoing renting might be worth looking into.

There are many reasons to consider buying a property. Potential financial savings, possible tax savings, equity build-up from debt reduction on an amortized loan, and potential appreciation are the most obvious.

If your child is attending school in an area that is appreciating nicely (such as Metro Phoenix), it may be a good investment simply for future appreciation alone. It’s wise to understand the market in which you’re buying the property. If you plan to sell after four or five years, you’ll want to know that it will have appreciated enough by then to offset the costs of buying and selling.

Depending on how you use the home, you may enjoy a respectable tax write-off on the property. If used as a second home (rather than as a rental property), most taxpayers can deduct the mortgage interest just like you do on your primary residence. Of course, you’ll want to consult with your tax accountant to determine the specific tax code for your personal situation.

If you and the student decide to include roommates that pay rent, it could help cover the mortgage and possibly even provide some monthly income. Just be sure to have a clear plan in place for handling roommate issues, your landlord responsibilities and your student’s responsibilities.

With apartment rents rising in many cities from year-to-year, it would be a relief to have your student’s housing expenses fixed. Owning also helps with stability for your student. They won’t need to look for new housing each year or find a place to store their furniture and belongings over the summers.

Before you buy, you should have a post-graduation strategy in place. You could sell it, keep it as income-producing for other students to rent, use it yourself if you’d like to keep it as a second home or retire there, or exchange it for housing for your next college-bound student – whatever city they may go to.

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