After high school, your child will most likely be off to college or university soon and ready to embark on the next journey of their lives. But deciding where they should live, especially if they are going to school in a different city, can be tough decision.
There are lots of things to consider about their living situation. Should they just rent, live in student housing, or should you buy a house and let them rent it out to pay you back?
Depending on the city they will be living in, buying a house may be a better option, and help generate some extra income.
Comparing Student Housing & Buying A House
You want the best for your child and to help them succeed. Some student housing prices over the course of a four-year university program could end up costing more than they would ever pay in rent to you. It is not just student housing costs that build up. These things should also be taken into consideration:
- Food cards and/or groceries
- Textbooks and supplies
- Transportation or car payments
- Phone payments
- Student line of credit (if applicable)
Student houses are cheaper than regular houses, so rental prices are not as high for students on a tight budget. It could potentially be a great source of extra income for you monthly and you are also building your home equity which can be handy when you need a loan or sell the house in the future. Students are also constantly looking for places to live around their school, which could make the home easier to rent out.
Becoming A Landlord
If you buy a home for your child and rent out the spare rooms, you will need to be prepared to become a landlord. Make sure you have a rental agreement in writing and come up with a date the month will be due for each student. If they are not making their payments, most students will have financial aid, so you should still be receiving their rent.
And no matter how close your child may be to the other tenants, there still may be problems that arise and indifferences. It might be up to you to help settle the issues like arguments over chores or someone not helping to clean up.
As a landlord, it will be wise to make sure you have a backup plan come the summertime if the students are not staying in the house. It will be your responsibility to cover the costs. But, you may be able to make certain claims on things come tax return time.
Prepare Your Child For Future Homeownership
Not only is it a great way to gain experience owning a home for your student, but they can actually get hands-on experience as well. If small repairs need done or repainting of the walls, have your child do that stuff.
There is more to paying for a home than the mortgage. Talk to them about how to budget should any unexpected maintenance costs pop-up. Also have them stay on top of cleaning regularly so the home value does not decrease. When it comes time to sell, you will still want top dollar for your student house.
Should You Sell When Your Student Has Graduated?
If you enjoy having the monthly rent coming in, maybe you will want to keep renting. Vacancies may arise in the summer, but throughout the rest of the year, students are constantly looking for places to live so you will most likely always have a steady flow of tenants. You may even have another child who is going to be graduating high school shortly, so if they are planning on moving away for school they have a place to live too.
If you have a student you want to help save as much money as they can throughout their schooling years, buying a house for them will not only help them save money, but also help you save money too. It is a great investment, but with all great investments comes a lot of responsibility that you may not be ready for, especially if they are going to school in a different city. Weigh the pros and cons and discuss options together. It will be a great learning experience for the both of you.
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