What do you think of buying a home for my kid to rent while in college?
Recently someone asked my opinion on buying a home for their college age kid. I personally think it is a great idea as long as you are mindful of the costs that go into it.
- Any investment home lenders are going to require at least 20% down on the home.
- Interest rate is going to be higher when a property is not your primary residence.
- Ask that magic question of how much the payment is going to be. You will need to factor in cost of upkeep, utilities, and general maintenance. Factor in how much you are going to charge each college student living in the home and see if you will exceed your monthly cost to have this property.
- Be prepared for 3 months of no occupancy and no rent. There is thing called summer break and unless the students are going to stay in the home while working over the summer; most likely you are going to have a lag in rent payments.
- Know the area in which you will be investing. Is this a stable environment? Are there other factors outside of the college that may be affecting the property’s value?
Overall, it’s not a bad investment if you play your cards right and are willing to take a risk.