“Kiddie Condos” are one of the newest buzz phrases and latest trend for parents of college students who are looking to treat room and board as more of an investment vs. an expense. The concept: Purchase a home, condo or apartment in the town where your college student goes to school, purchase the home with them on the mortgage, and have them live there vs. campus housing or renting off campus. The idea behind the strategy is to put the money a family would generally spend on room and board, required meal plans, and out-of-state tuition into a property.
Great areas to purchase these types of properties are in areas that have low property costs and rules for obtaining residency are very college student friendly. It might seem very generous to buy your college student a home, but the money you can save in the long run can be huge. In addition, your college student will most likely have roommates, whom you can charge rent to, and that money can go towards paying the mortgage on the property.
One parent of a student who attends a large University in TX, bought a $210,000 condo, which saved the family an estimated $30,000 on room and board in the three years of college her daughter lived in the condo. Once she became an in-state student, they saved an additional $40,000 on out-of-state tuition costs during her daughter’s junior and senior years, plus the rent they were able to charge 2 roommates that lived there for 3 years.
Once your student graduates you have a few options. If your child continues to live in the area, they can continue to stay in the home and pay rent, refinance and put the home solely in their name, or if they leave in the future, you can rent it out for residual income or choose to sell down the road.
Not only do Kiddie Condos serve as an investment, but they can also help your college student attain a higher credit score. It’s really a trifecta of benefits: rental income, helping your child build credit, and helping them to establish a stable place to live.
This concept certainly isn’t for everyone, but it can be a great option for those who are able to take advantage of it. Students and parents who wouldn’t be ideal candidates are those who get scholarships which cover room and board – it would actually cost them money vs. saving. Before you put a down payment down, you’ll want to look into how easy it is to become a resident of the new state. Some states require that a student be 21 years old and have a reason other than school to live there to claim residency. It’s always best to talk to a Realtor in the area you plan to buy in who knows the residency laws.
What do you think, are Kiddie Condos the future of college housing? If the thought of college expenses is overwhelming, learn more about what to expect and how to get help by CLICKING HERE. Before your Freshman heads off to school, check out these great Finance Tips every 18 year old should know and visit any of our local branches to open up one of our fantastic Graduate Accounts – perfect for your high school and college students.
Washington Branch Manager, Assistant Vice President