Let’s start off with a few questions…
If you answer yes to any off these, you may want to read on.
1.) Do you have children in College?
2.) Do you have a high school graduate on the way?
3.) Are you spending money on Room & Board?
4.) Are you spending money on an apartment for your student?
The “Trends in College Pricing” for 2016-2017 indicated that average college housing costs were $10,440, up from $10,150 in 2015-2016., and its projected to rise.
At a local level, let’s take DePaul University’s housing rates according to the Department of Housing Services (you can find that HERE)
At a glance it looks pretty comparable to a mortgage payment..
From our experience researching international activity, investment property for foreign students has been quite common. With the quality of our Universities in Chicago, the city attracts students from all over the world. These students, whether with the assistance of the parents, or on their own, are commonly purchasing homes to live in while attending school. So why aren’t more local families and students doing the same?
By purchasing a property, families gain another asset for their portfolio. And since most students follow the traditional path of “renting” their dorms and housing, there may be an opportunity for those that decide to pursue the path of “dorm ownership” to benefit.
Let’s cover a few things…
RETURN ON INVESTMENT: Traditionally there has always been a high demand for property around college campuses. When demand is high, the return may be high as well.
RENTAL INCOME: After your child graduates, this property can potentially be a source of rental income. If the property you own has an extra bedroom(s) while your student, or students, occupy it, an extra bedroom can be rented out and used as rental income as well. This is frequently done to help with the costs of the property.
DIVERSIFICATION: Diversify your portfolio by investing in Real Estate. Real estate yields a much higher return than most stocks and bonds.
TAX INCENTIVES: Owning an investment property yields more tax benefits.
Let’s take a look at some studio, one bedroom and two bedroom options…
STUDIOS: Generally one living area that also includes space for a bed. Very comparable to a dorm room. For examples on pricing and availability, CLICK HERE
1 BEDROOM: Spacious and convenient, generally will have ample room separation. More conducive to longer time frame living arrangements. For examples on pricing and availability, CLICK HERE.
2+ BEDROOM: Ideal for those that may be looking to “rent” the extra bedroom to help with mortgage payments, or to receive additional rental income. For examples on pricing and availability, CLICK HERE.
We commonly recommend that our clients have one property per child. Investing in a property when your children are in college may be a good way to introduce homeownership, and the responsibilities that come along with it.
Everyone’s needs are different, and we get that. There’s value in convenience, and there’s a value of placing the responsibility elsewhere, but again it comes down to the numbers. Could you be missing out on a good opportunity?
If you are looking for more advice when it comes to a decision like this, feel free to reach out. Depending on the situation and your financial goals, it may not be a bad idea to link up with one of our advisors to help you monitor the options that come available.
We are here you, and the financial success of your family in Real Estate. Contact us anytime.
RCG ADVISORS INC.
Please send your inquiries to: Rob@RCGChicago.com