College Town Real Estate: Should Parents Buy?
Turns out that in the right areas, it can be more economical -- and maybe even a good real estate investment --for parents to buy their child a home or condo in a college town instead of tossing money on rent or dorm fees.
But once the kids graduate, are mom and dad left holding the mortgage?
Not necessarily, and some parents say that they just might downsize to Junior's condo. The CEO of Coldwell Banker, Jim Gillespie, says interest in college towns is always going to be high and recession-proof, because people perceive value in the investment -- even more so if they went to school there.
Rogers Healy is like the Mark Zuckerberg of real estate. The 30-year-old Dallas real estate broker got his license while a college junior at Southern Methodist University. He saw a trend of parents leasing fancy apartments for their kids -- his fellow students. Then builders started constructing town homes that were marketed toward those same kids.
Rocket science: Healy first leased, then sold units, which morphed into a full-time job, post graduation, just as the Dallas market was heating up.
If I could do one thing forever, Healy says, I'd develop my business on college campuses with high-net-worth students. There's always going to be a daddy's princess who needs to be housed in style for at least four years.
condos that were leasing for about $1,100 a bedroom. The client asked for the selling price of the units. And the client told him: $600,000 apiece. The client asked how many were available. There were three. I'll take them all, the client said.
"Property here was appreciating at 7 to 12 percent in the peak years, '05 to '08," says Healy, who launched three more websites this year. According to Healy, LivebyTCU.com is netting him 20 to 30 clients a day who want to buy near the Texas Christian University campus in Fort Worth; in Austin, ATX.renting.com sends him a few buyer leads, as does SanAntoniorenting.com.
Speaking of San Antonio, I still own a home there that I purchased for about $175,000 in 2005, when my son attended Trinity University. After he graduated in 2007, I leased it to three female students. It's now in the hands of a young couple who will be leaving in April. I may sell the house, or lease it again next spring, which Rogers reminds me is prime time for college leasing and buying.
Healy got in on the upside of the market; others may not be as fortunate.
Gloria Curtis' daughter also attended SMU. She and her husband had a friend who was a developer in a new project adjacent to the SMU campus, and they bought a two-bedroom, two-bath unit in 2007 for about $450,000. Gloria's daughter moved in along with three friends. The parents' primary concern: safety for their girls.
"It all fell into place with her friends and roommates because all the parents wanted the kids to be safe and secure, says Curtis. "And everyone always paid their rent on time."
The girls had 24-hour security, as well as access to a spa, health club and restaurants. For a time, the place even had a car that the girls could use as a shuttle service. But now that her daughter has graduated, Curtis says that she knows they won't make a profit on that condo if they sold it tomorrow.
If she could go back, would she still have signed on the dotted?
"Knowing what I know now, I might not have done it," she says. "But the jury's still out for us -- I think we can make it work for us, but it will take a little longer."
If worse comes to worst, Curtis says that she may sell her home in Garland, Texas and move into that fun Dallas condo.
These AOL Real Estateguides can help, whether you're in the market to buy, rent or sell:
- How to Shop for Your First Home
- Tips for Finding a Rental Apartment
- How to Price a Home to Sell Fast
- Vacation Homes: Is Now the Time to Buy?
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