Oct. 2006
If you'll be sending a kid off to college anytime soon, it might be worthwhile to check the prices of homes for sale near campus. Who knows? By the time your student graduates, you could have an appreciating property to sell or ongoing rental income and a tax write-off.
One of the more consistent and stable real estate markets for traditional second homes and rental properties are the residential neighborhoods surrounding established colleges and universities. Why? The school isn't going anywhere, and visiting faculty, staff, and students always are going to need a roof over their heads.
According to the National Association of REALTORS®, not only are recent retirees "buying down" to smaller college towns with their educational amenities and vibrant social and athletic environment, but a growing number of business owners with relatively small groups of employees also are moving to smaller college towns for the convenience of research and a larger entry-level employee base. Buying a home in a college town and letting visiting faculty members rent it out and thereby reduce your mortgage, is a great way to build an asset.
For parents with college-age children, purchasing a home to rent in a college town makes a lot of sense and provides an attractive alternative to dormitory living. When the student graduates and you are finally free of tuition bills, expensive textbooks, and outrageous airline tickets, sell the college rental via a 1031 tax-free exchange and buy a rental condo in the sun that you can periodically enjoy.
One of the safest real estate moves is investing in a single-family residence, or duplex, in close proximity to a college or university. You will have a constant pool of renters. If you are considering purchasing in a college town, it's always a good idea to know an adult who lives within a 30-minute drive of your rental property. That way, if the entire Greek Row camps in the backyard for the weekend, you can at least send someone to count the tents.
Here are some quick suggestions you won't find in the campus bookstore:
Some Texas REALTORS® suggest that parents think "condo" rather than "single-family dwelling." That's because students rarely prioritize maintenance and upkeep issues that ultimately protect the investment. A condo eliminates chores such as grass cutting and gutter cleaning that need to be handled in a conventional home.
If you're a parent with kids nearing college age, try to estimate how many years you expect your child to live in the near-campus rental. Many accountants advise parents with college kids to approximate what home prices will be when the student's course work is done. And, if he or she transferred, would you want to rent to students who aren't family members?
