Off-Campus Capital
August is National Back to School month, and as we watch the backs of our little ones entering what we hope will be an enriching learning experience, I want you to hold off on the mimosa for a sec and consider this. Have you thought about your child’s future once they hit the college scene? I don’t know about your college experience, but I do recall that come Sophomore year, those young adults are going to start seeking shelter off-campus.
You know how important investing in your child’s education is, but do you also know that actually investing for their future is setting them up for wealth and success? Ponder this—excluding tuition, consider the on-campus expenses you pay. Let’s use VCU as an example:
Those numbers are per year, so imagine little Jimmy going for his 4 year college degree and you’re out $80K. Imagine the expense if they been accepted to a private school!
Consider purchasing a home for your high school grad. It’s not that far-fetched. I’ve known a few parents who did this as a present for their kids’ graduation and it turned out to be a great investment for all involved. The benefits of becoming a landlord to your child and their roommates are plenty, but also what it will do for you all in the future financially is a great reward.
Start them off early and show them that the after-school job can do more for them than any video gaming system purchase. If I had that knowledge in my high school years, those part-time gigs could have relieved many years of renting headaches and saved me thousands of dollars.
The average rent for apartments (1 bed) in Richmond, VA is between $1,285 and $1,786 in 2023 with the average rent for a single family home being around $2,038.
Here are a few pros of buying for the next four years:
Decrease student debt by omitting on-campus room and board.
If there is a roommate/partner situation, mortgage payments will be reduced or paid for.
It could be a nice way to decrease student loan debt.
Student loans can help with rental and living expenses.
Build equity and income.
Once they graduate, you have a few options. They can take over the mortgage payments, become their own landlord, create a vacation rental, or sell it.
They’ll be happier living in their own independent space.
If you have other children going to school in the same area, the residence can be passed down from generation to generation.
It will teach them responsibility and money management.
Of course there are cons:
Maintenance will need to be handled, so you might have to pay extra when things go wrong. Make sure you have a handy network of on call professionals.
Safety. It won’t be like a secured campus. They will have to take more precautions.
Being a landlord can be difficult if your tenants are late or don’t pay their monthly rent.
If you are a student, sometimes there are age restrictions in applying for a mortgage and also debt-to-income ratio can be a challenge.
If you are interested in investing in your child’s future by purchasing a second home or having them purchase their first, contact me so we can get you started. it’s never too early and my lenders are on stand-by to answer any mortgage loan questions. Now feel free to sip those mimosas and wave goodbye to your future investors.