College housing Featured

10:02am EDT August 20, 2004
If you have children, you probably began saving for their college education when they were very young. Today, there are many new and innovative investment accounts and programs to help make that task a little easier.

But where will your child live when he or she leaves the nest for college? Many campuses require students to live in university housing during their freshman year. After that, they are often on their own.

From fraternity or sorority houses to off-campus apartments or group houses, the choices are many and the costs high. But there is a solution that might be a win-win for both your student and your investment portfolio -- purchase a condo or home in your child's college town.

With interest rates still at historic lows, favorable tax laws and the notion that housing is one of the best investments you can make, this option is looking better and better for some parents. You may be able to lower the cost of housing for your child, help them get off to a good start in terms of building a credit history, give them a sense of responsibility and give you peace of mind that your child is in a safe living environment.

Here are a few questions to consider before making a college-area home purchase for your child.

  • Is the area around the college growing? Research the city or town where the school is located to see if it has suitable housing at a reasonable price. Check out prices to see if they are appreciating. Find out whether there is economic growth and other industry in the area. A local real estate professional can give you a clearer understanding of the housing picture.

  • Will other family members or friends be attending the same college over the years? While college selection is unpredictable, you can sometimes gauge whether the college is popular with your child's peers or siblings. Buying a home for your child now may become a long-term investment (and savings) if you have other children who may attend the same school. If you choose wisely, you may be able to rent the home after your own children have graduated.

  • Can owning a home or condo help with tuition fees? Some out-of-state students can establish residence if their parents purchase a home for them in the college town. This may enable students to pay in-state tuition rather than the more costly out-of-state tuition.

  • What about the size of the home or condo? It does matter. You may be inclined to buy a one-bedroom residence because the purchase price is lower. But look at the possibility of a home with several bedrooms and baths. If your child has roommates who pay rent, you may be able to generate income above the mortgage payments, giving you a nice return on the investment now. Additionally, multiple bedroom properties may have a higher resale value, making your investment that much more lucrative.

  • How can this affect my child's credit history? Consider including your child's name on the contract and loan. This can have several positive outcomes. For one, there are many first-time homebuyer assistance programs that make it easier for students to qualify for a loan. This will help your child establish a credit record, and it may enable you to get a lower loan rate than you may have had on a comparable investment loan. By putting your child's name on the loan, you are also giving him or her a feeling of pride of ownership.

Everyone's situation is different, and professional advice is required. Be sure to consult with your tax or financial planner before you move forward. College is a place for your children to learn new things and prepare for the future. Buying a home in their college town may be a way for you to do the same.

Jim Schmidt is president of Coldwell Banker Residential Brokerage, the No. 1 residential real estate firm in metro Atlanta. The company includes 27 real estate branches plus specialty divisions - The Condo Store, Builder Developer Services, Commercial and Corporate Relocation. Affiliated companies offer mortgage, title and closing services. Coldwell Banker Residential Brokerage is a member of the NRT family of companies. NRT Inc., the nation's leading residential real estate brokerage company, is a subsidiary of Cendant Corp. For more information, call (404) 705-1500 or visit