Parents Investing in College-Age Children’s Housing: A Growing Trend with Financial Benefits
Salt Lake City Real Estate Agent Buys House for Son’s College Years, Turns Investment Strategy
When Klew Yeh Mori’s son entered his junior year at the University of Portland, she made a bold decision that is gaining popularity among parents of college-age children. Instead of paying for dorm rooms or off-campus apartments, Mori, a real estate agent from Salt Lake City, purchased a house for her son to live in.
“I don’t have to waste money on rent anymore,” Mori explained in a Realtor.com report. “Now we’re collecting rental income from his roommates to help with household expenses. It’s a win-win for me.”
This trend of parents buying properties for their college-age children is on the rise, driven by the increasing housing costs in many college towns. Parents see this as an investment opportunity to build equity instead of spending money on expensive dorms or rentals.
Real estate broker Samantha Sousa highlighted the potential benefits of this strategy, stating, “It’s almost certain that the demand will be there for rental properties in a college town. With college towns, property values historically rise, so if parents decide to sell after a few years, they will likely benefit from the equity built.”
While the strategy can be lucrative, it also comes with risks. Parents become landlords, responsible for maintenance and potential property issues. Additionally, there is the concern of the property turning into a party house if students are not responsible enough.
Jay Voorhees, founder of JVM Lending, shared success stories of investors making significant profits by buying properties for their college-age children. He emphasized the importance of favorable owner-occupied financing rates and establishing children’s credit early.
For Mori, the investment goes beyond her son’s college years. She plans to keep the property as a rental after he graduates, potentially making a substantial profit without paying capital gains tax.
Her son, Shoji, has also gained valuable experience from managing the property. “I run the household, collect the rent, and pay all the house bills out of a designated account,” he shared. “This situation forced me to put on my big-boy pants and figure stuff out.”
While this strategy may not be suitable for all markets, it can be a smart financial move in areas like Muncie, Indiana, where properties near universities are more affordable. In pricier markets like Portland, where Mori bought the house, the decision requires careful consideration.
Overall, buying a property for a college-age child can be a strategic investment that offers long-term benefits for both parents and students.