College costs are rising faster than prior years. In the past two years alone tuition for a 4-year university public schools has risen 15% and 10% for private schools. New graduates are also assuming more debt making it harder for echo-boomers to buy a home. Investing in a second home near your student’s college offers a solution to these challenges.
By investing in a real estate, parents save on the room and board portion of rising college costs. According to a recent article in the New York Times, parents can save on the interest rate for a mortgage by putting their student’s name on the mortgage as the property becomes owner-occupied rather than an investment property. The Times noted that this has the added benefit of allowing the student to build credit (even if the child doesn’t make a single payment themselves) and take responsibility for the property.
While the student is in school, they can take in roommates to help pay the mortgage on the property. Depending on the property, taking in roommates may even cover the entire mortgage. Further, if the student gets a job near school after graduation, they can assume the mortgage payments, continue build their credit, and increase their savings as the property builds equity over time. But parents can continue to rent the property for a revenue source as well.
Increases in student enrollment also make investing in a student rental a good bet, according to the National Association of REALTORS®. The Five Colleges area consists of the University of Massachusetts, Hampshire College, Amherst College, Smith College, and Mount Holyoke College. There are also numerous other colleges throughout the Pioneer Valley.
If you would like to mitigate the rising costs of a college education by investing in a second home , make your first call to Michael Seward at 413-531-7129.