It's Back to School time, and if you're an empty-nester, you may be driving furniture around right now as your new high school grad moves to University Town. You might be looking at those teeny, tiny rooms in campus dormitories and thinking: I'm paying for this?
Is there an alternative to the overpriced dorm life or, off-campus, paying rent that goes out the window? In the current housing market, it could make more sense to buy a place for your offspring to live in while he/she attends college or university.
It might be cheaper to buy a small condo, for example - even factoring in maintenance fees and taxes - than to rent, especially if it is in a less expensive housing market (say, Kingston, Ontario vs. Toronto, both university towns.)
You should compare the cost of a dorm or renting an apartment against the total cost of mortgage and insurance payments, property upkeep expenses, condo fees (if applicable). You should also assess, with the help of a realtor, the quality of a neighbourhood, and the recent trend in annual appraisals in that block.
Of course, you're going to have to weigh the risk of damage that the college lifestyle might take on your property!
"Q Cash" - the blogger at Million Dollar Journey, a great Canadian blog about financial advice, who declares that he has built his net worth up to $1.5 million by age 36 - writes about a residential duplex owned half by himself, half by his partner, a house bought with a buddy when they were in university:
"At the time, we squeezed 7 guys into the place over three years and pretty much demolished it. Subsequent to graduation, we converted it into a duplex (basement apartment) and now rent to a grad student and a nice family who take care of it for us. Not the most efficient use financially, but definitely the best use from a PITA (Pain in the A**) factor. There is an identical house across the street and the landlord gets 8 girls in the place and takes in almost triple the rent we take in. However, he is there almost every other day and that is his full-time job."
(On the other end of things, if you've built a rental suite in your home, and you live near a post-secondary institution, you could be benefiting from a great source of income as landlords to someone else's offspring!)
Have you lived through this transition to parents as landlords, or have some thoughts? Leave your comments here.