Does It Make Sense to Buy Your College Kid a Property?
How much are you paying for room and board at college for your child(ren) if they venture out of your home for an education? Buying a property for those 4 years (or longer) is more common than you would think. I am seeing this happen more and more where parents are purchasing a property as an investment or to lower some possible costs. It potentially benefits all in the scheme of things:
- There are possible write-offs
- Should you choose to sell it afterwards, chances are pretty solid that you will see a profit.
- Room and Board can cost $5-8K a month. If your kid’s assuming student loans, you’re not financing their living, you’re removing that four-year commitment of $60,000-8,600/year of debt and turning it into an investment.
- It may just enhance your child’s sense of responsibility, accountability, and financial acumen.
Living in Metro Boston, with so many colleges and universities, these parent buyers are probably more prominent here than elsewhere, save New York City. There are countless investment condos, from Seaport to Fenway, and homes in the burbs. I used to think it was all offshore transactions, but now as an agent, I am seeing more and more parents buying places for their college students.
Some are realizing that it’s an attractive and viable option to purchase rather than paying the room and board expense as it may just benefit all around. You get a write-off, you can make a little money in the end, and it elevates your child’s learning focus. And maybe, he or she won’t need a car. They have an increased level of responsibility than the average college student. I have witnessed this especially with graduate, medical and law students. Their parents wanted to ensure that their kid had the benefits of and focus on their education and wouldn’t be sidetracked by distractions in a dorm environment.
When you look at it in those terms, there’s no losing situation really. You could end up making money or you end up saving money on paper.
Is there a downside? I suppose you have to trust that your son or daughter will take excellent care of the property. While we know that real estate tends to appreciate, one possible drawback is what to do when your child graduates—do you keep, sell, or rent?
Depending on your financial situation, this may make great sense. And a wonderful teaching “moment” for your kids!