House/condo purchase instead of dorms

Parents Forum
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<p>My H and I were discussing the purchase of a house or condo for our children's use at college, with the possibility that we could rent out a room or two (depending on size) very close to the college (walking distance). Especially if you have more than one student in the same college, this idea seems to make financial sense, especially the rental aspect which might help pay a mortgage.</p>

<p>Has anyone done this? Did you then sell the house when your child(ren) left/graduated? How do you handle maintenance & security if you live far away?</p>

<p>Thanks!</p>

2

<p>My daughter's friends mom bought a condo for her two sons at our state university. I don't know what she plans to do when they graduate as she still has three years to go. If either stay for grad school, she will have them there longer. The third bedroom is rented to a friend of one of the boys.</p>

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<p>Do you know if the mortgage/upkeep + furnishing and food will pay off or wind up costing her money after the 4 or so years?</p>

<p>I don't mind being a little over the college's R&B charges, especially since kids are eating half their meals out anyway. But, I am a little nervous about unloading a house, especially, four years later, after being occupied by several college students.</p>

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<p>I don't have advice for you, sorry, as I am not in position to do what you are thinking of doing. However, one of my daughters just moved into a condo that her apartment-mate's parents bought for her last year as a sophomore to use during college (both girls are now juniors), and I think with thoughts of their daughter also using it post graduation. It is in Manhattan. They also fully furnished it. As my kids (or anyone) would tell you, it ain't no college apartment! It is beautiful. There are two bedrooms, two bathrooms, a living/dining room, kitchen, and large deck. My D just had to bring her normal college stuff but no furnishings. I imagine the girl's parents saw this as an investment (and her dad is in the field of finance after all). Perhaps they also see it as a place for themselves at some point (I don't know if this is entirely true) as they reside in London and could have this place in NYC for business travel. They bought it when it was brand new and I imagine it will appreciate in value (I have seen listings for units like this one in the building at close to one million dollars!). </p>

<p>As far as food expenses, I don't see that as an issue tied to owning the place of residence. That is more of an issue for kids who either live off campus or simply not on the meal plan. My two college D's are not on the meal plan and we give them the money that the school meal plan would have cost every month instead. So, it costs the same for us that way. </p>

<p>For my D who is living in the condo, we offered to pay what housing would have cost at her college. Of course, we are not the owners who pay way way more than that I am sure to maintain this condo. But they will recoup their money whereas we will not. They also invested in furnishings whereas we did not. However, they could eventually sell the condo furnished or else their furnishings could go to their D wherever she may live in the future. Obviously, if you live in a dorm, you don't have to pay for furniture. But those who live off campus and even rent, often have to invest in some furniture (though neither of my kids have had to.... but their friends have). </p>

<p>Also, if you buy a condo for your child and he has one or more apartment-mates, that helps with the carrying costs (we pay rent and utilities to the other set of parents). So, it could be a good investment if you have the money. You may even make money in four years. Or, even if you don't make money, you won't be "losing" the money to housing at a college but will recoup it. </p>

<p>You'd have to trust your son and his roomies to keep the place nice, however. My D's condo-mate, whose parents own the condo, has a maid and we did have to agree to split the cost of the maid (something I didn't know about when I first agreed to the rent, but that is how it goes).....now my kid has a maid and I don't! But that is one way to keep the place nice if that is a concern. This particular condo is gorgeous and I know my D will care about not wrecking it given the type of place it is and that she is a guest (a paying one, but still). As far as security, they have 24 hour security with a 24 hour doorman and a 24 hour maintenance man as well. The parents of my D's roomie obviously trust their D and so you'd have to assess your own situation with regard to this aspect with your son residing there and keeping the place intact.</p>

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<p>Wow! I want to move in with your D! Sounds fantastic!</p>

<p>We are considering something considerably less swanky - a 50-yr-old brick house with 3 bedrooms + 1-1/2 ba, kitchen, Diningroom, Livingroom and two large porches. The condo is the same money but of course, smaller. Plus, while it has a pool, there is no actual yard, and the kids would have a longer walk to the college. It just seems to make more financial sense to us over paying for 2 or 3 kids' R&B to the same college (for almost $20K!).</p>

<p>Sounds like your d is in a New York Paradise. I want the maid most of all!</p>

6

<p>We have two sons at the same campus, one year apart, but have elected not to purchase a condo/apt/house. It might make economic sense. However, I don't want to lock the two of them into living together in the same place the entire time they are at college. It seems part of the growing-up process to procure a place to live, to select your roommates, to pay the rent, and to deal with landlords. What if they have a better opportunity at a sweeter place (a killer condo, like soozievt's daughter) rather than the place we bought? What if, what if, what if...too many of those. So we're sucking it up and letting them work out their own living arrangements.</p>

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<p>fencersmother....my D did luck out in this situation. I am paying the same as I would have for the dorm (though honestly the dorm payments at her university are huge compared to my other D's housing fees.) My D knows she is not likely to live in such a fine NYC apartment upon graduation, LOL. Yesterday, we moved our other D, who is a senior, into her off campus house (which is truly on campus as much as any dorm would be, and is owned by her university). There are nine girls in the house but each of the three floors is an entire apartment in itself for three girls with their own bedrooms, a living room, a kitchen/dining room, and a private bathroom. The furnishings are WAY below what my other D has, but this apartment/house is huge compared to space in NYC. It also costs less than half as much, but so does her college's dorm fees. Do you mean you may have more than one of your own children attending one school? If so, your idea sounds like a good one if you can afford to do it as an investment and eventually get your money back on it, particularly in an area that has popular turn over with the college population or those who work at the college. </p>

<p>PS...I want the maid too. :(
I think of my D's new college apartment as being "Annie" in Annie (sorry, but with a musical theater kid, who let alone has played Annie on stage, that's the way my mind wanders!). In fact, today D told me that she had friends over to her new place last night and nobody can believe the kind of apartment she has for college compared to theirs (and they are paying similarly)....which again, reminds me of when Annie had the orphans over to Daddy Warbucks' place. My D's place is not like that but it is pretty darn nice. And my other D's abode is not on that level but it is so big, it is hard to believe. Her bedroom is way bigger than she's got at home!</p>

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<p>We bought a condo for d. when she was starting her soph. year. It was 2 bedroom/2 bath and very convenient to the school. One thing I liked about it was that the neighbors were all older (50 and up) and mostly single women--they kinda kept an eye on things! </p>

<p>Yes, we had to furnish (though roommates bought/brought their own bedroom furnishings. Though I had to get furnishings for other 2 kids who rented. We liked the decision as about half our mortgage payment was paid by roommate and of course the girls split utilities. After the initial investment and some updating, there wasn't much cost at all. We just put it on the market last month as our d. has moved to another city.</p>

<p>I will consider doing it again for the youngest (he is renting right now) after we get this one sold. After seeing the price for rent where you get absolutely nothing back--think it was a good deal.</p>

<p>We only considered condos/townhouses as we knew d. would not keep up a yard and we would have no exterior maintenance to worry about. The condo association fees at her place were only $40/month.</p>

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<p>I'm sure you will do a financial analysis to see how much more expensive this route is vs. the dorm. Two comments:</p>

<ol>
<li> This seems risky because it is short-term and because in most markets prices are going down. You face the possibility of decreased value after 4 years. </li>
<li> I've been a landlord of a few condos in a popular college city over the last 20 years. The few times I've rented to undergraduates I've regretted it.<br></li>
<li> You have to find a good property manager that your tenants and your children can call to do repairs & maintenance. Also, if you don't want your children collecting the rent, the property manager can handle this too. The cost of a property manager should be factored into your analysis.<br></li>
</ol>

<p>I like real estate investments, but I see them as long-term. I think the days of an easy flip are over for now.</p>

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<p>I know of a family that had 5 or 6 kids that all were headed to the same college (parents' alma mater). When the first kid was ready, Dad bought a house in the college town and cycled all the kids through it over the course of a decade. He then sold the house for a tidy profit that paid for a large chunk of what he'd spent on the educations. Of course this only works this well when you can be reasonably sure that all or most of the kids will attend the family college.</p>

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<p>I am considering doing this when D goes to graduate school. Her program is 3years long, so the issue about short term benefit is valid here. Plus I'm hoping that graduate students would be a little more responsible tenants.</p>

<p>I think in the end it really needs to be based on location and price. If we can get a decent townhome/condo in a walkable area to the school, at least we can continue to rent until selling it would make financial sense (if the market is tough, like it is now).</p>

<p>Lots to consider. But I do like the idea that if I have to pay monthly "rent", at least if there's ownership, there are tax benefits and potential to at least recoup your investment, if not make a profit.</p>

<p>I'd love to hear from more who have done this and how the experience turned out. Plus if anyone is actually willing to give a little more info about the type of area, ie urban, suburban, etc. that would be helpful.
Thanks to all for the info.</p>

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<p>Friend has a son at Alabama and the house he lives in is 2 blocks from the football stadium. The parents of one of his roommates own it. They will have 3 sons rotate through the house. Several of the houses on the street are owned by parents for their children and roommates. If our daughter's college was in a more urban/surburban area we would consider it but not for her freshman year.</p>