Mother moving daughter into home

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Parents Are Buying Real Estate in Their Kids’ College Towns

August 24, 2021

Homeownership can offer more long-term perks for college students than a dorm room would, so parents are stepping in to help their college-age children buy a home in their college town. Real estate professionals told Bankrate.com they’ve noticed this long-held trend is growing.

Buying a home for their grown children to live in during college could cut costs and offer a solid investment.

Jeffrey Decatur, a real estate professional with RE/MAX Capital in Latham, N.Y., told Bankrate.com that he first had a parent client buy their first-year college student a house because the college didn’t allow students to have a car. The parents bought a house so their child could keep a car. But then he started to notice the trend more, especially among medical and law students. “Their parents wanted to make sure they had every advantage and weren’t distracted by other distractions going to school and they had a place to focus and be quiet and study and what have you,” Decatur told Bankrate.com.

Decatur says college students may pay about $6,000 to $7,000 per semester—or $14,000 a year—for room and board. So one of his clients used that $14,000 per year to invest it in a three-bedroom home for their college child. They rented out two of the rooms for less than what the college was charging. When the student graduates, their parents can use the home as a rental or sell it.

Also, “if your kid’s taking out student loans, you’re not financing their living,” Decatur told Bankrate.com. “You’re taking $60,000 of debt out of the equation to your kid turning it into an investment.”

Still, parents are left with the task of selling or renting when the adult child graduates. Also, they have to trust their child will keep up the property. But the potential cost savings and a more private place for their adult children may be worth it to parents.