Parents Are Buying Homes in College Towns to Avoid Pricey Dorms (and Earn Rental Income)
The average cost of private college has nearly doubled over the past thirty years, and public college is up by about 150%.
Families have little power over what they pay for tuition. But they can control living expenses — a budget line that averages between $12,000 and $13,600 a year for on-campus room and board. To save (and sometimes make) money, some families choose to skip the dorm and dining hall and instead buy a home for their college-aged child to study and sleep.
The benefits are pretty straightforward: Your student can live with friends, who pay rent. That covers your child’s expenses, and it ideally covers the property’s expenses. At graduation, your kid leaves with a diploma and you’re left with equity in a home that, with luck, has appreciated during your child’s college career.
There’s little data available to track how many parents pursue such a strategy, but it isn’t rare, even in the wild housing market of recent years, multiple real estate agents and financial planners say.
“This is a common thing to do and it can make a lot of sense,” says Jim Crider, a financial planner in New Braunfels, Texas.
Why parents consider purchasing a home for their college student
Buying a home can mean saving money on college expenses while also making a good investment, says Robert Persichitte, an Arvada, Colorado, financial planner. He points to a client who bought an older townhome within biking distance to the University of Colorado’s Boulder campus.
“The daughter lived with three roommates,” he says. “The rent from the roommates covered the mortgage and left them with zero housing costs, aside from utilities and incidentals.”
