Cut College Housing Costs of Your Student with This Single Strategy
College Board is a nonprofit formed in 1900 as the College Entrance Examination Board. They have done surveys of American colleges and have reported the cost of going to a “moderate” college in 2014-15 averaged about $23,000 dollars a year.
“The College Board reports that the average cost of room and board in 2014–2015 ranged from $9,804 at four-year public schools to $11,188 at private schools.” Source: College Housing Costs
Additionally, many colleges can provide average costs for living off campus. Not very often is living off campus cheaper, especially when the additional expenses of utilities, furniture, fees and any additional transportation needs are factored in. With the dream of college in many young people’s mind, and the cost tightening on the parent’s savings accounts, Legacy Properties- PM wants to offer a strategy: income property.
A parent, or even a savvy student, can cut their college housing costs by purchasing an income property. We aren’t talking about any property, but rather one that is a multi-unit such as a duplex, triplex or four-plex. The strategy is to have all sides of the property able to bring in income.
Here are some examples:
With 10,000 of typical college housing costs, we are looking at a property that can cover the mortgage payment, plus maintenance for a year, in addition to driving that housing cost down. If we assume a $1200 monthly mortgage payment on a duplex, the student would pay $600 month and the other tenant would pay $800. This would leave an additional $200 month to put aside for maintenance and a prudent reserve, and drop the college housing costs by about a third.
If the unit was a four-plex and we assumed the mortgage payment was $2000 a month, the student could rent one space for free, and the 3 other tenants would each pay $800 a month. This would drop the college housing costs to nothing, including the utilities and maintenance if they were given back the overage or if they were the homeowner. (The student being the homeowner is also an additional benefit for building credit, building income, and the rules around owner-occupied properties).
Of course these are for illustration only. To determine all the costs involved with an income property, speak to a professional Realtor who specializes in investment properties.
This strategy can be used for more than the 4 years of college attendance as well. The multi-unit house can continue to produce income for another student in the family, or even build a passive income for the parent.
The idea of being a landlord on an income property with college students makes your stomach turn? The use of a property manager is like an antacid. The property manager can screen candidates, collect funds, enforce compliance and charge fair market value rental rates, so you are always getting the best value from the property. And, the value they offer in good asset management, typically offsets their cost.
Want to talk more about this college housing costs reduction strategy? Contact Legacy Properties-PM today.
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