Can student housing really be a good investment?
While rising tuition costs grab the headlines, the bulk of the cost for sending kids off to university is actually four or five years of food and lodging.
At the University of Toronto, residence fees vary and increase every year; throw in a meal plan and an approximate average is $10,000 per year.
Instead of forking over even more cash to the university or nearby landlords, some enterprising parents prefer to buy a nearby property for their children to live in during their university years.
That's what one Kleinburg couple did the year before their oldest daughter started her second year of studies at Wilfrid Laurier University in Waterloo.
"Over all, it was a very profitable experience,” they told the Globe and Mail. "We had enough rental income coming in to offset the monthly costs of the house, and at the same time we were building equity."
The decision to buy depends on the school's location, the cost of housing, the student's abilities to handle things, and the parents' feelings about what they too can manage, both financially and logistically.
Nonetheless, as long as a family saves money on the overall room-and-board package, buying a place can be a good strategy, some advisors say.
Of course, your child or their roommates may not stay there over the summer break, so you have to factor in a few months of vacancy.
"If you can pay what you would pay for campus housing toward buying a home, that's a pretty big win," advisor Rick Kahler told Financial Planning. "You build some equity in the investment, and if they're going to be at that school for four to eight years, that could go a long way toward building investment equity."
After a student graduates, parents can sell the property, rent it out again or hope that a younger child might choose to attend the same or a nearby school, he suggests.
Too optimistic? Have you housed your kids this way? How did things work out?
By Gordon Powers, MSN Money
Posted by: Dave Brown | Apr 1, 2021 11:15:35 AM
People have done this and achieved successful outcomes; however, there can also be significant risks when factoring a "student" demographic. Responsible children can sometimes have irresponsible and unreliable roommates.
Posted by: Tinkerbell | Apr 1, 2021 7:23:57 PM
A great idea/opportunity.....if you can afford it. My parents couldn't even afford my tuition let alone a 2nd property for me to crash . I lived with my parents while in school. I worked full time while attending and paid for all my own costs via working income and student loan. My parents didn't have to dish out a cent. I am now a University grad with a Bachelors degree. My student loans are paid off and I have good job with the government.
I am glad I had to work and pay for it on my own. It helped me develop a strong work ethic and gave me a tremendous sense of accomplishment for doing it. Parents pay for full tuition and accommodations AND you don't have to work while in school? Ridiculous. Kids these days are too spoiled. And when I say "kids", I'm not talking like an 80 year old looking back on several generations as I am only in my 30's.
Posted by: christy | Apr 2, 2021 1:19:39 AM
Both my kids changed their original plans after 2 years - one went to another city to pursue a better program (with credits from the first program), and the other dropped out to work and travel, then again moved to another city to pursue new studies. Living at home was never an option as we live in a small town with no college or university, so we considered getting a mortgage on a cheap property where we thought our kids would both go to school - and finish there. So glad we didn't.
Posted by: Alexcia | Apr 3, 2021 11:25:52 AM
My mum & I will be doing it this fall. Ive worked and saved up my money for the downpayment & so I will have no student loans and the house will pay for itself it 2 out of the 3 spare rooms are rented.
As stated in the article, it all depends on the housing market where you are and the maturity/mindset of the student.
Posted by: Maggie | Apr 3, 2021 3:06:56 PM
No No, too much liability for an university student who just left home and take over the house. Besides how mature your kid but not the roomate. Think about fire, flood that damage the property, the most scarly is what if there is casulty from fire or carbon monxide if it happens?? I have 2 kids going to same university. 1st one already stayed in 5 years and 2nd one is first year and I never think about it even we can afford.