<p>We bought a condo for our d’s soph/jr/senior years. It worked out great. Had one roommate. Was a good deal for them both—we charged roommate half of our mortgage which was much cheaper than rents in similar complexes. We were able to build some equity and sold for “even” when improvement costs deducted. Another plus was that d learned how to deal with workmen, DIY projects, etc that as a renter she would have just put on landlord.</p>
<p>Presently we own a condo that youngest son is living in. Downside is that he only has lived in it for two years and is going to do some post grad work at another school for a year. So for now, we are going to just keep it “half-let” with the present roommate. If son doesn’t return to that school in a year, it will go on market either as a “for sale” or will contract with a management company to rent it out until market improves.</p>
<p>Our oldest son wanted us to purchase at his college. With him, we said NO! He was such a slob, hated home repairs and would never be able to deal with roommates as a landlord. I could see disaster in the making with the situation.</p>
<p>Overall, I like the purchasing option if feasible for the area, the kid and the pocketbook. I absolutely hate paying rent. Just seems like money down the drain.</p>
<p>When I was at Harvard for graduate school in early 80s, I was surprised by the number of classmates whose parents had purchased a condominium for their adult-child’s use. But then I was also surprised by the number of classmates who had never had a summer job, and by how many had spouses/SOs who openly helped with homework and projects.</p>
<p>I’ll also note that in early 80s the Cambridge rental housing market was an unpleasant mix of high rents and poorly maintained apartments. There was rent control, which was often circumvented by landlords renting “furnishings” at a separate high rental rate. Harvard’s own graduate housing was a mix of affordable dormitory rooms, some tiny 50s boxes and some enormous vintage rooms with working fireplaces, window seats, and built-in bookcases, and relatively nice but expensive high-rise 60s apartments, but not in sufficient quantity to meet demand. For a middle-class (or poorer) student, housing was an expensive issue.</p>
<p>Let me just throw in the mortgage aspect of this question (assuming OP would need to finance the aforementioned purchase – which may/may not be the case): underwriters would typically view your purchase as investment property unless it could be considered owner occupied for the student, in which case you’d need to check out your state’s laws about the minimum age for said student to sign loan documents. If the student can’t be on the loan, investment property rates are usually 3/8% to 1/2% higher than rates for primary residence, and if/when you sell the property, you can’t automatically roll the proceeds into a new purchase without incurring capital gains UNLESS you do what’s called a “tax deferred exchange” (i.e., like to like – buy another investment property through an intermediary). This is probably TMI but I would just suggest you run your scenario by your accountant and see what the tax implications are.</p>
<p>As a historical footnote, when I had my first job in NYC and my brother was going to medical school, he told my parents they should buy a place in Manhattan he and I could “share”. I had no desire to live with my brother, and there was no acceptable middle ground between upper east side and Spanish Harlem. But if they’d taken his advice (back in the '80s), we could have sold that 1 bedroom apartment for about 4x times what they would have paid for it…hindsight is always 20/20, especially with real estate.</p>
<p>Higgins–your memories echo mine. I felt my male colleagues had wives working as research assistants, typists, cooks, etc, plus they lived in so much nicer places!!!</p>
<p>I sold my Boston condo. I never expected that 20 years later, my S would end up in that area. Oh well, I can never guess real estate waves.</p>
<p>Time for some stories:
A buddy of mine rented a house off campus with some gal pals in snowy New England. They weren’t very good about knocking snow off their feet when they came in the house (hey, it’s a rental!) – well, come spring and warm weather . . . the carpet sprouted mushrooms. The gals were stunned that the landlord didn’t refund their deposits. . .</p>
<p>Story Two: Four of us grad students rented a house off campus. Great for a year. Then one of the gals gets a boyfriend and he’s like a fifth roomie. Not always a polite, neat roomie either. One day the lovebirds feel they are being picked on and move out in a huff – leaving disarray in their wake. Very turbulent. </p>
<p>Story Three: Great kid we know wants to rent a house off campus. Parents co-sign lease. It’s a big house that can host about 8 renters. Suddenly it’s kid’s job to chase around roommates for monthly check. Turns into huge headache and parents have to come up with the difference anytime one of the roommates is short. </p>
<p>Sure, the stars could align. It is possible to have a mature student who is friends with other mature students and affordable housing in good shape is available. But, man, I’d surely be reading every “Handbook of Landlord Horror Stories” out there and doing a lot of “What if” discussions with offspring before going far down that path. </p>
<p>One of the biggest “what if’s” is how to handle things when a tenant doesn’t pay. There are laws that protect tenants and one certainly needs to know them before becoming a landlord. Also, one would want to be quite expert on liability and insurance issues. You can’t rent a car until age 25 — I suspect that is because car rental agencies know a great deal about liability costs associated with the 21 to 25 set. </p>
<p>Some parents bought the home next to our first home for their daughters while they were in college. They really, really were not good neighbors. They had a dog – a snapper and a barker that they left out in the backyard all the time, without ever picking up dog poop. The dog seriously did not like anyone being in any of the adjacent back yards. They didn’t take care of the house, didn’t shovel the snow or rake the leaves or water the lawn. We moved, but my hope is that the girls’ parents took a bath on the house whenever they sold it.</p>
<p>D1 will be working in NYC after graduation. H wondered if we should buy a place and rent it out to her. I said no, and I also told D1 not to buy because she doesn´t know where she will be a year or two from now. As someone who is beginning to move around more, it matters where you declare residency, tri-state area around NYC is not most tax beneficial.</p>
<p>I hear often from people that rent is just down the drain. It is not always the case. You need to figure out taking into account of down payment (opportunity lost in other investments), tax benefit, cost of upkeep, appreciation, transaction costs…to figure out true cost of homeownership. In the last few years, there has been very little appreciations, so all the cost associated with home ownership is truly down the drain.</p>
<p>Interesting thread… we are in the process of discerning whether or not we will purchase a condo for D1 who lives in Boston this year. She is two years post-grad and over a year in Boston now, and it looks like she will stay there. She lives in a more heavily college-aged populated area now and wants to move to a more stable area, where “grown-ups” live.</p>
<p>We are looking at this purely as an investment. It will most likely be two-bedroom and one of her current roommates would room with her. If, by some small chance, her roommate backs out, D would be expected to find another roommate to pay us rent (daughter would be expected to pay rent). If something happens over time and she does move, we would expect to hold onto it (and probably use a property management company) until we could sell it without a loss, however long that would take us. Luckily, the area D is looking in is an up and coming area… lots of good stuff going on there and we could be fortunate enough to get in early. </p>
<p>But I’ve got a lot of homework to do in the next few months before this happens.</p>
<p>I have to agree that real estate may not be the best investment vehicle for a few years. Numerous articles state that buying may be better if you stay in your home at least 6 years. That is a long time for young adults. Each of my 2 children who are in their 20’s, had moved to 3 different cities since college graduation in less than 6 years either for employment or grad school. In addition, as soon as they are more financially secure, none of them wanted a roommate. They value their privacy much more and are willing to pay for it. What seems desirable now may drastically change in as little as 2 years.</p>
<p>Even a recent graduate should investigate less than permanent housing. </p>
<p>DS got a great job in seattle at Udub. His school and internships are done, but he like to do his dream job which may land him somewhere else. </p>
<p>Until they are married, job that they like, and in a desirable location, I’d be real careful in making a commitment financially for you and an obligation to them.</p>
<p>agree with cbreeze. DS lives in a shared house. Opposite to cbreeze kids, he requires very little privacy and pays accordingly. He’s been at this house for 20 months and this makes it the longest he has been in one address since he left college.</p>
<p>We would never do this for D2, who will likely move around after graduation.</p>
<p>D1 absolutely loves Boston and it’s where all of her friends are. Even though she’s only been in her job one year, she’s had a head hunter call her about other jobs in Boston, so it’s very, very likely she’ll be there, I’ll bet, at least five years, minimum. Her current job would definitely keep her in Boston - less than 5% chance of any relocation from it. </p>
<p>She is already thinking down the road of the time when she could live alone in a two-bedroom condo and not need to have a roommate, which is why she prefers a smaller square footage place - her goal is to be able to afford her own rent.</p>
<p>The only unknown is location within the Boston area. Her job now is within easy access to public transportation. If she were to look for another job within the Boston area, if she found something that wasn’t easily accessible by public transportation, she would have to consider buying a car, as opposed to moving to another area of Boston.</p>