Should I Buy a Condo for My College Student?

[Sep 11, 2009.]

 

Back-to-school season is in full swing and a hoard of college freshmen are adapting to being away from home for the first time in their lives. Living in a dorm is a rite of passage for many underclassmen, but some college students are taking up residence in condos or houses purchased by their parents. Here are some tips to help parents decide whether it actually makes sense to purchase a property for a college student.

How Much Can I Borrow to Buy a Home?

Affordability is obviously a huge factor in determining whether or not a family can buy a property for a college student. Anyone shopping for a mortgage must show they have enough income to make monthly payments on a mortgage for what would basically be an investment property or vacation home. Finding that extra income can be tough for many families who are already making monthly payments on a mortgage for their principal residence.

Mortgage Qualifying Calculators Can Help

Using mortgage qualifying calculators allows home buyers to see exactly how much income they need to qualify for homes of varying prices. Home buyers can enter estimated taxes and insurance in addition to principal and interest payments. Using such a calculator can help a family determine what they need to do to make themselves more attractive to mortgage lenders. It's best to run the numbers well ahead of the time buyers plan to shop around to compare mortgage lenders.

Checklist for Families

U.S. News and World Report recently ran an article that gives parents several things to consider before purchasing a property for a college student. Questions to ask include:

—Does the college have rules that require students to live on campus at some point?

—Have parents adequately researched the real-estate market where they plan to buy a property, especially if it is in a different city or state?

—Can the buyers afford maintenance, upkeep, and any condo association fees on the property?

—Have parents checked out rental housing near campus to make sure they aren't passing up suitable apartments before getting involved in a real-estate deal?

Buying a Property Isn't for Everyone

Shows that feature house flippers had many people flocking to purchase investment property before the real estate bubble. But given current market conditions it isn't realistic for anyone to assume they'll be able to quickly sell a student condo once their son or daughter no longer needs it. Purchasing a condo or house for a college student is a huge investment that can work for some families, but may be a bad move for others.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.