Investing in a Second Home for Your Student Child

Investing in a Second Home for Your Student ChildAs college education costs continue to rise, many parents are exploring alternative housing options for their student children. Rather than paying for room and board in a college dorm, some parents find it more economically viable to purchase a residence or apartment for their child. This not only provides a place for their child to live but can also serve as a potential investment opportunity.

Financial Benefits

One major benefit of purchasing a second home for a student child is the potential for rental income. If the property has two or more bedrooms, the rent paid by roommates can help cover part of the mortgage payment. Even an extra room, like a den or separate dining room, can be converted to a bedroom if local occupancy standards allow it. By acting as the landlord and on-site manager, the student can take responsibility for the financial and physical upkeep of the property, potentially encouraging them to take better care of it.

Considerations for Buyers

Buyers should consider several factors when purchasing a second home for their student child. Proximity to the college or university is crucial, as a location near campus is preferable for attracting other students who will share and pay rent. Other aspects to consider include availability of public transportation, access to student activities and shopping, neighborhood safety, and property security.

Rental Considerations

Rental rates for the summer may vary based on local custom. For example, roommates may be expected to pay a full rent during the academic year and a lower rate during the summer to secure housing for the next academic year. If the property is located in a popular summer area, parents may consider evicting all students for the summer months to earn higher income on seasonal rentals.

Resale Value

Future resale value is a major consideration for parents purchasing a second home for their student child. Other parents interested in buying a residential property for their student children are likely prospects. Graduation, however, may or may not coincide with the best time to sell the property. A student child who stays in the area after graduation might become the owner of the property by buying it from the parents on an installment basis. If the property value has not appreciated much, the parent owners might want to rent it out for an income stream.

Maintenance and Repairs

Like any absentee owners, parents should have a file of contacts for repairs and home maintenance, such as electricians, plumbers, heating and air conditioning specialists, appliance repair, and emergency board-up services. Providing a list of reliable local service providers can be a valuable service for parents and students alike.

Investing in a second home for a student child can be a smart financial move for parents. By carefully considering factors such as location, rental potential, and resale value, parents can make an informed decision that benefits both their child and their financial future.

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