Real Estate

Investing in off-campus housing

How you can win the college expense game

It’s that bittersweet time that parents dream of and dread. Your child is heading off to college.

Excitement, anxiety and just plain old fear are likely daily emotions for both parent and child. Looming over all the emotion is something even more dreadful…the EXPENSE. What does this have to do with real estate, you’re wondering? I want to help you with a little strategy that just might save you BIG.

According to the Bursar’s Office at Skidmore College, the rate for the most affordable room and board option (there are several) for the 2017-18 academic year is $14,004 or $1,167 a month. Other Capital Region colleges have similar costs. Union College in Schenectady comes in at about $12,500 a year and UAlbany at about $10,000. Meanwhile, the average price of homes sold in the last year and within a mile radius of those two schools came in at $101,000 and $180,000, respectively. So, what if there were a way to eliminate this cost, provide your future rocket scientist some real life skills and make a solid investment all at the same time?

Let’s think about the college area housing markets for a minute. Typically there is an ample supply of housing around colleges, and many students, especially upper classmen, choose to live off campus. Rarely, though, are those students/parents considering actually owning the house the student lives in. If your child chooses to live off campus, it is likely not about finances, as he or she probably isn’t paying too much less than the room and board charge anyway. The motivation is to upgrade the space a bit and have the freedom and flexibility of living like a real human instead of a cellmate. Of course, living in the freshman dorm allows your child to meet other students and to be better supervised, in theory, but some students prefer their own space and privacy, with a quiet place for studying, and potentially even room for mom and dad to visit … hotel room savings to boot!

While we’ll use Saratoga Springs as the example below, I’m positive these numbers work anywhere. The nice thing about considering buying for student housing is you don’t have to buy at the high end of the market to get something suitable. When you’re a young adult, anything that doesn’t involve parents living in the same space is usually just fine. If you choose wisely and buy intelligently, this home should provide its own opportunities once your child graduates: a flip perhaps or a solid future rental property, maybe even a second home.

Consider this:

Room and Board: $1,167 per month

Monthly mortgage for a $350,000, four-bedroom house: $2,250 (assuming 10 percent down and including taxes and insurance)

Four students living in that house: $800 rent each

With only three of the rents, it totals $2,400 income… and guess what that means? Someone (hopefully your child) can live for free. After four years of college, you can sell the house as a flip, renovate for future personal use, or allow said child to continue living in and managing the house rental, etc., all while reaping the tax benefits of an investment property.

Are there risks and maintenance considerations? Sure, but doesn’t any reward come with risks? For the smart investor and someone not afraid to take a risk, this can truly be an excellent opportunity to “win” at this college expense thing.

“Real estate is an imperishable asset, ever increasing in value. It is the most solid security that human ingenuity has devised. It is the basis of all security and about the only indestructible security.”

—Russell Sage

Room and board at the 100-year-old college for girls in Troy named for Russell Sage, the esteemed financier, costs about $10,000. With a median home price of just $194,000 in Rensselaer County, parents would be wise to follow Sage’s advice.

Christine Marchesiello has been selling residential real estate in the Capital Region for more than 11 years and specializes in the Saratoga Springs area. She lives in downtown Saratoga Springs with her husband and two daughters.

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