Live in the Dorm or Buy a House?
By: Whitney Tyner, Zillow PR Specialist | August 27, 2008
Photo courtesy of Associated Content
Last week, the Wall Street Journal raised an interesting question: Is it financially beneficial for parents to purchase off-campus housing for their students during their college years instead of paying hefty dorm fees? As a recent college grad, this idea really got me thinking.
While the potential gains are tantalizing, there are some major red flags and risks involved with financing your child’s private study environment/animal house. To further tap into this concept, I read up on the Zillow blog about buying a house for college and raised this question on Zillow Discussions yesterday. “Mom & Dad: Should I live in the dorms or will you buy me a house?” Four hours and 45 comments later, I had my answer—or at least a lot of new opinions.
Azrob: Do you really want an 18 year old to have the added responsibility of being a landlord/homeowner?
Chutta: I remember a home that I and 8 other friends rented in college. Stayed there for two years. When we did the walk through with Landlord’s daughter (he gave her the home) she cried.
Charlene Hanson: If you plan to buy an investment property anyway, it makes sense, but in today’s market, you’d probably have to hold it longer.
Brtlmj: I live in a college town. Yep, that’s what many parents do - or at least they used to. People who did it and sold a year ago or earlier got their kids educated for free.
My advice: Parents, make your kids live in the dorms. Dorm life builds character, strengthens your immune system, and is the heart of undergraduate college experience. Parents, college is your time to relax and enjoy an empty nest. Don’t stress yourself out by micromanaging your child’s college experience. Hat tip to everyone in Discussions for your great insight.
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Comments
9 Comments so far
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Landlfip on August 27, 2008 12:27 pm
I will have to agree with you. I feel that there is too much responsibility involved in allowing an eighteen year old to own a house while in college. Yes, some are mature enough to do it, but for the most it is an accident waiting to happen.
However, the one’s that did own the house usually got credit for having all the great parties!
Sarah Mann on August 27, 2008 3:42 pm
I have to agree as well– I wouldn’t have wanted to own the house I lived in with 7 other girls in college. Granted, there was only 1.25 bathrooms. I am not sure what we were thinking…
Short Refinance on August 28, 2008 1:35 pm
Well, I agree and disagree, I agree because if you find a home for your 18 year old there is risk. But if you look at it as an investment it may not be. Dorm Costs can be huge, depending on the college. But if you can find a foreclosure or a bank owned property for pennies on the dollar, you as the parent could rent the rooms out to your child and to other students… What do you think of that?
Sandra on August 29, 2008 6:19 am
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Dorm Life vs. Ownership « The Notorious R.O.B. on August 29, 2008 10:40 am
[...] some 15 years away from having to worry about college — I couldn’t help but think about this post on Zillow’s blog: While the potential gains are tantalizing, there are some major red flags [...]
Vicki Lloyd on September 1, 2008 9:19 pm
I’m the parent of a daughter who became the owner of a house, 2 blocks from her college (San Diego State), at the age of one month-short-of-her-20th birthday. She had experienced living in the dorm, followed by a year in an apartment, where the apartment management severely “cramped their styles” by calling it off-limits to drink beer by the pool after 10pm!
After looking at rental homes in the area, we determined that for the same monthly cost as renting for the 5 roommates, we could buy a house (with 3% down) and pay the mortgage, taxes, insurance, gardener, and home warranty (that would fix the broken items that the college kids would probably wreck.) We used an FHA loan with daughter and roommate as the primary borrowers, and the 2 sets of parents as co-signers.
They had loud parties, the cops came and threatened to fine them, they had roommates move out, and new incompatible ones move in, but someone always paid the rent, which paid the mortgage.
My daughter was the “property manager” and collected the rent from the roommates, called the home warranty company to fix things, signed the leases, as landlord, when new roommates moved in, coordinated the damage deposits at move-in and inspections and deposit returns at move-out.
We all learned that kids who go from “Mom & Dad - to dorm - to house” don’t realize that light bulbs and toilet paper don’t just grow in the cabinet, and someone needs to call the utility company to put the billing in someone’s name, or the water doesn’t run and the lights won’t turn on!
Over all, if the numbers work (rent vs buy) it can be a terrific experience for both the student and the parents to invest in a college house. After owning our college house for 8 years, (daughter was in it for the first 2, and roommate’s younger siblings for the next 2, then strangers for the next 4 years) we sold it at a substantial profit, paid off her student loans, paid for her wedding, and put a pretty good chunk in the bank!
I would do it again, if I had another kid starting college now!
College Student Builds Her Own House | Zillow® Blog on September 10, 2008 8:39 am
[...] few weeks ago, Whitney wrote a great post about the housing conundrum that parents of college students face: Is it more financially beneficial to have their kids live in the dorm, or buy them a house to [...]
College Towns: An Investment Worth Holding? | Zillow® Blog on October 1, 2008 1:26 pm
[...] paying the tuition, college towns may be one of the safest places to buy. The relatively constant housing and rental market, plus steady employment numbers, seems to insulate the local real estate market from short-term [...]
Anonymous on February 11, 2009 1:53 pm
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