<p>"Parent Investors" are a new trend in the college town real estate market. </p>
<p>Parents</a> Head to College Towns to Buy Real Estate - FoxBusiness.com</p>
<p>This is something I would consider if my S ends up at RIT. There is not enough student housing and a lot of kids are off campus. I would not consider it in DC where my D is though.</p>
<p>I knew a family that sent all their kids to BYU. When the first one went the parents bought a house in Provo for his housing. Then over the next decade all the kids cycled through the school and lived in the house. After the youngest graduated they sold the house at a handsome profit that recouped prettty much everything they had spent on tuition for all the kids. (This was back when houses prices were still rising).</p>
<p>This is not news. I knew families that purchased property for their college kids to live in back in the 1970’s.</p>
<p>The days of making money in real estate is over for quite awhile…A generation ago, it was much more feasible,as housing costs weren’t as extreme…Just the carrying costs of utilities/taxes etc(assuming paying cash for the home) is not significantly less then renting…add in realtor fees/closing costs/Real estate transfer fees on purchases and sales(varies state to state),and i would be surprised if it pays off going foward…</p>
<p>^Definitely locality-specific. We are considering this option when D. goes to Grad. School. It will depend on renting cost vs. buying cost (with possible renting to roommate). We are not looking into making money flipping, we want to minimize living expenses while paying for Med. School and real estate prices have been down.</p>
<p>^^^</p>
<p>Wasn’t even referring to “flipping”, as that game is over…I look at my D room and board of 27k per year,over a 12 month period that is $2250(granted she is at school for 9 ± months,but you are carrying the house for 12)…In the Northeast,property taxes for mediocre homes fetch 8k and many top 12k,so the difference(in my case) is 1500 per month from paying r&b,and the carry cost of only property tax…a medicore home is going to cost 300k(once again this price is local),realtors take 6%,so 18K needs to be “even”,our state assesses a 1% fee on purchase and sell,so another 6k is gone,or needs to be recouped at sale time,tack on yearly homeowners insurance of 800±,maintainence costs/upkeep,and unless you are in a very low cost area,it doesn’t make much financial sense,even if you bought for cash…</p>
<p>^I was thinking more about condo/apartment, not the house. But we have no details, D. has not decided yet, though it will be in Midwest. There is a huge range of prices.</p>
<p>Hope it all works out!!!,though i am of the opinion that apts/condos will fair even worse for the next 4+ Years…As a homeowner for 25 years,having owned 4 homes in that time frame, i can’t see one reason(aside from historic low interest rates) to “gamble” on a 2nd home for college use…Historically interest rates and home prices have had an inverse relationship,and in a few years,mortgage rates can only go up,hence,home prices decline or stay flat</p>
<p>^We might not take long mortgage, it depends on price. if price is comparable to car price, then it might be couple years mortgage. In our city, prices are really down, D. will not be here, but she will be relatively close.</p>
<p>This is not really a “new” idea, but with the low, low interest rates and the depressed market prices it’s probably feasible for more families. It’s not unusual within our friends. The only decision is what to do with it when S/D graduates. We had a couple friends who lost alittle money because they had kids graduating in 2008-2009-2010 but they bought in a peak market so as long as someone has a plan it’s a nice alternative to dorms which the kids typically have “outgrown” after freshman year. I don’t know I doubt any of us thought about “making money” it was probably more like breaking even or not paying 3 Star Hotel prices for cinderblock and bad food.</p>
<p>I thought about buying a condo for my one kid to use but in the end decided against it since they were expensive (La Jolla!), the length of time she’d really be using it was short, just 2-3 years, which isn’t enough time to be assured of any real estate investment (although I could have rented it out if she was done with it), and I didn’t feel comfortable about the housing market sine I felt it was too high and going up too quickly. This was just before the downturn. I’m glad I didn’t buy it.</p>
<p>My approach on buying real estate (as a non-professional) is to not even think about buying it unless one is willing and able to hold onto it for at least 5 years in the event there’s a downturn.</p>
<p>We used to live in Berkeley, and it was common for parents to by apartments, condos, etc. If the market was in a downturn, there were many property management places that would place renters until the housing market improved. Since most people rent in town, it was easy to find tenants.</p>
<p>I thought this was going to be about the *parents *moving to their kids’ college town–something we frequently threaten our kids with.</p>
<p>Hunt, talk about Helicopter Parents!</p>
<p>
If I bought a place in La Jolla, I think I’d move there myself! To heck with the kids!! ;)</p>
<p>^^ This was in a somewhat less expensive area of La Jolla (really ‘relatively speaking’) where a lot of the UCSD students live - an area called UTC or University Town Center. It’s walking distance and easy biking distance from UCSD. It’s still La Jolla though so prices aren’t cheap. I’m still checking on prices around there since it seems like I should buy something while the market’s down a bit. Homes are still plenty expensive around there though with tons of $1M and up places (not the price range I was looking at!).</p>
<p>“This is not news. I knew families that purchased property for their college kids to live in back in the 1970’s.”</p>
<p>Ditto.</p>
<p>Now is a great time to buy in college towns - at least around here. Condo prices are ridiculously low. I’ve seen some incredible deals. I’m a Realtor, and I’ve just had a run on investors buying condos to rent to college kids. My customers are especially interested in renting to med and law students. I think they are hoping those students will take better care of the condos than would an undergrad. When my customers go to sell those condos in 3 to 5 years, they are going to make a tidy profit.</p>
<p>I think in certain parts of the country it is definitely a great time to buy…</p>
<p>For example, in the area where my parents live you can buy a decent townhouse for $350K (3BR/2.5BA/1,750 sqft/built in last 5 years) relatively near the major university in the city.</p>
<ul>
<li>20% down = $70K </li>
<li>interest rates @ ~4-4.5% (for this example we will assume 4.125% - my current rate as I just bought a few months ago).<br></li>
<li>Taxes ($10 levy rate) = $3.5K (annual taxes)</li>
<li>Homeowners insurance = $600 (annual)</li>
</ul>
<p>This leaves you with a monthly payment of $1,699…net out your debt tax shields ~$270/month (assuming a 28% effective tax rate) means that net net you are out of pocket $1,429 per month. Rents in the area for students are ~$500-800/month (excl utilities) Assuming your kid lives there and rents out the other 2 bedrooms for $650/month then you’re own kid’s cost of living is less than $150 per month. Assume you hold the property for 5 years or so it should appreciate enough that you should be able to sell at a price high enough that you cover your selling costs but probably won’t make a profit on the property (maybe a minimal profit).</p>