Cut College Cost of Living by Buying a House
An unsettling trend awaits many parents as they begin to prepare for their children's college education. While the cost of living has largely remained constant relative to inflation and other national lifestyle trends, the actual price of tuition is skyrocketing. In 2006-2007, the College Board reported that the average in-state tuition cost for a four-year public university is over $12,841. Out of state students attending the same campus can expect to pay $19,188. And the average cost of annual tuition at private four-year colleges is $27,677.
Don't just save money, actually make money off of your student's room & board
Most colleges charge roughly between $7,000-$12,000 per year for on-campus room and board. While on-campus housing offers a legitimate service to the student body, there is really no way for fiscally aware parents to capitalize their resources in this type of arrangement. Many parents have found a way to make money off of their student's room and board situation, as opposed to lose money.
Affordable rental property in a college area will always have a steady market
By purchasing a multi-bedroom house in the vicinity of their student's college, parents can actually capitalize on their child's room and board costs. Instead of dropping $7,000-$12,000 into a dorm room that yields no return, parents should consider investing that money in the mortgage and maintenance of a house near campus.
The child can live in this second house while attending college, thus providing his or her parents with a real estate investment. Instead of emptying their money into a dorm, parents are investing their money in the real estate equity of a second home. Depending on the size of the house, most parents decide to rent out rooms in the house to other college students. Rent from their student's roommates can be sufficient to cover the cost of mortgage payments and maintenance substantially.
Obstacles to consider
Before jumping into this venture, make sure you do a careful analysis of the property you intend to buy. Your investment is only as strong as your actual equity. Research real estate trends in any neighborhood you consider buying. Try to project the equity of a particular house in five to six years. Will your house be worth enough to sell and make a profit after your son or daughter graduates?
Additionally, some universities have a policy that limits first-year students to living on campus. If this is the case, talk to your student's college admissions office. Often, universities with these types of policies will make exceptions for first-year living in a parent-owned residence. And of course, make sure the house you buy is close to school, ideally within a short bike ride or even walking distance of campus. Although a house within accessible proximity to public transportation such as a bust stop or train station can work just as well.
