After running through the motions of numerous home sells and purchases, an experienced home owner might find themselves thinking of taking the plunge once more when their kids head off to college. While many home owners may consider purchasing a home for their children away at college to live in a savvy investment opportunity, this short-term purchase can quickly turn into a nightmare and has the possibility of bringing even the most experienced home owner to their knees in cost and hassle.
Contrary to popular belief, real estate is not always the wisest investment. Here’s why you might think twice about buying a home for your college student.
Real Estate is a Long-Term Investment
Those who expect a profitable return on the money invested in real estate, realize that a solid return in value will not come in just a few years of ownership. Prudent real estate investors focus on building value in homes over the course of 10 to 15 years, not the four to five that it takes the average student to earn a college education. While it is possible that your child may consider settling down in their college town after school, it is more likely that they will venture on to bigger and better things once that degree is in hand, leaving you with no choice but to sell your “investment” for a minimal, if any, return.
A Good Deal is Hard to Find
Finding a good student rental real estate deal is like finding a needle in a haystack. It’s a popular conception held by parents of college students that buying a home to rent to students is a good investment, which is a notion that has helped to drive up the price of such properties. If a home isn’t a good deal right off the bat, it will likely never catch up and make you any money that is worthwhile in the end.
Property Management is Exhausting
As the owner of the home, you are responsible for its upkeep, which can be costly and back-breaking work. With your student’s primary focus being school and eventually landing a good job, you won’t want them worrying about broken pipes, collecting rent and dealing with unruly neighbors. The responsibility of maintaining such a property should fall squarely on your shoulders, and this can be a pretty taxing job to take on. If you happen to be miles away and unable to run out every weekend to fix a broken toilet or busted A/C unit, be prepared to spend a lot of money on hiring help to make these fixes for you.
Summer Vacancies Can Get Pricey
One of the many great parts of college is having the summer off of classes, which will likely work to vacate your property for a few months. Many insurance policies expire if a property is left vacant for longer than 30 or 60 days and you may end up paying extra to keep policies from lapsing. While you’re paying these additional fees you won’t be collecting rental income from your vacant property resulting in a costlier deficit for you to over come.