<p>I'd really like to hear the experiences of anyone out there that chose to purchase a condo or home in a college town for their students or for investment purposes. What are the benefits and limitations?</p>
<p>When I went to grad school at University of Florida, my parents bought a condo for me to live in and for an investment. It was impossible to sell after I finished my degree; my parents rented it out for years which was a tremendous headache for them (they lived in NY and had to deal with this condo in Gainesville) and eventually sold it for a loss. </p>
<p>Unless you are sure you can maintain the resale value and that it’s an area that’s in demand, I wouldn’t recommend it, based on our experience.</p>
<p>Agree,4gsmom, make your decision based on the resale ability if you intend to sell it when the kid(s) move on or if you are willing to become a landlord after the kid(s) have moved on. We seriously considered it as we have other rental property and are not novices in that regard, but took a pass because we didn’t want to be long distance landlords if we couldn’t sell it after the kids were done. We’ve also had friends who have been able to sell quickly and it worked out quite well for them. Location will be a huge factor in this regard especially in this economy. Another factor to consider is how many years use your kid(s) would have. Many colleges require freshman to live on campus, some schools freshman and sophomore. Are you thinking one kiddo or more kiddos using it. From a cost perspective it also can depend. Are you buying it for cash, are you financing the majority of it, what are the estimated living expenses for your kid(s) over time vs. buying something, what are the management fees going to be after your kiddos move out if you are a distance landlord, how will it impact your taxes. You need to run the numbers to see how it works for your individual family and your objectives.</p>
<p>I suppose it depends, a lot, on the local demand for housing. In areas where they can always bulldoze another field, or fill in a swamp, it is a risky maneuver. If you are talking a condo in Manhattan, then there is a limited supply that cannot go up much. Might be a better investment. Or if you want, and can afford, a vacation place in that area.</p>
<p>You should also consider your child. Will they stay at that school for the 4 yrs? Or could he/she possibly want to study abroad or transfer? </p>
<p>My SIL bought a 4 bdrm house for her two children attending the same school with the thought of renting 2 rooms out to students. Her kids have had to deal with roommates moving in and out every yr. Plus, they’re upside down in the mortgage as a result of the downturn of the economy.</p>
<p>“You should also consider your child.”</p>
<p>Do they really want to be “stuck” in the same off-campus housing for four years?</p>
<p>Friends just unloaded the one they purchased for their son who dropped out part way through the degree program. They sold it for several thousand less than they paid for it after trying for over a year to sell it. They tried renting it and it did not work out well with no one there to screen tenants and really take care of it, unless you want to pay a management company.</p>
<p>Singesmom07, yes, if you are a long distance landlord you really need a family member or a local management company. College rentals get a ton of abuse from the kids and as the owner you have liability exposure! If it’s in a resort area and you are going to use it after the kids leave and not put it in a rental pool, that’s a different story entirely.</p>
<p>You need to focus on the financials and there are so many variables. I considered doing that here a few years ago but I wouldn’t buy anything that I wouldn’t be willing to hang onto for at least 5 years and I wasn’t sure how long my kid would have been in it since the first couple of years were in dorms. I also was concerned about prices since they were at record highs at that time so I didn’t buy. Good thing! That was just before everything headed in a downward direction. That condo is now valued at less than it was those few years ago.</p>
<p>If the financials seem good, you’re willing and able to hang on to it for at least 5 years, you’re willing to rent it out or eat the monthly cost when needed, and are convinced it’ll appreciate in that timeframe, then it could be a good move. It’s more feasible depending on where it’s located now that prices are down.</p>
<p>I’ve known of people who purchased either a condo or home for this purpose though so people do it but again, there are too many variables to make any blanket conclusions about whether it’s worth it or not.</p>
<p>This made a lot of sense when home prices rose in just about every market because of easy credit. With credit staying conservative for the foreseeable future, I would not consider this unless you saw it as a longer than 4 year investment. With the issues you’ll face renting to students, it wold not be worth it as an investment in the vast majority of markets.</p>
<p>Thank you all for your insight. The girls are required to live on campus the first year, so I have time to evaluate all of our options. Based on the above comments, I think I’ll take this year to become as much as an expert as possible about the real estate in the town. The headaches and risk seem to out weigh the financial benefits.</p>
<p>It sounds sorely tempting in places like Arizona, where the market prices have fallen but not forever, or Champaign, where prices are low and there will be a steady stream of other students/parents to try to sell to. But these are some sobering observations.</p>
<p>I had a friend who inherited some money before attending college. Bought a home in college, fixed it up and sold it when he graduated. Bought another when he got his masters and again when he got his law degree. Fixed up both and sold them upon graduation. Net result was upon graduation from law school he had a home where he was going to practice law and a vacation home, both at least partially paid for with the money he earned fixing up the college homes and reselling them. Needless to say he was quite handy and did most of the work himself (although I’m not familiar with the extent of the work he did). BTW, this was in the '70s.</p>
<p>We’ve done this for 7 years. Its a hassle especially if it is a distance away. The advantage is that it is easy to rent. The disadvantage is that students trash it.</p>
<p>My mom bought a condo at Auburn when I was there so that I could get in state tuition (Alabama has some pretty strict requirements so it was either buy property or get married). We ended up renting it out for two years because I lived in my fraternity house (lived in the condo freshman and senior year). The landlord aspect wasn’t bad because I was in town and the renters were upper classman in my fraternity. I think it helps that they knew the owner. She sold it for a hefty profit when I graduated (towards the peak of the housing market).
I wouldn’t buy now. I don’t think this market is done declining and there are going to be another large round of defaults/foreclosers coming in 2010-2011 when the rest of these ARM loans adjust, of course that’s just my opinion.</p>
<p>We have several student condos in our building. Parents bought for student in Loyola, DePaul or Northwestern as all are close by. They cant sell them but new students take over and parent becomes landlord. Students usually move out at end of school year so rents are 9 month years and not 12 month years. If students make to much noise condo can and have voted overnight to stop all rentals.</p>
<p>I’d talk to a Realtor in the area - they will know if it is a good 4 year investment. There are always many factors so don’t go it alone, look for a professional to help you!</p>