High school graduation is nearing and you may have a child heading off to college this fall. As we know, college is an expensive proposition, with tuition, books and housing. If you, plan to help out your child with the expense of higher education, an often-overlooked way to do so is through housing.
A “kiddie condo” can be a way not only to help with the housing, but it can be a good long-term investment for you as well. The property doesn’t have to be a condo but could be a single-family home or duplex as well. The idea is for you to purchase an investment (rental) property in the area of the college to house (or rent to) your child while he or she is in college, rather than to be paying rent to someone else.
The purchase can be made outright, or if you have existing investment property, you could do a 1031 Exchange to get the property near the college. A 1031 Exchange is a way to defer the capital gains on a sale of an investment property by replacing it with another investment property.
When one of my daughters was getting ready to go off to college, I acquired a condo in the area of the school. Since she was strongly encouraged to live on campus the first year, I hired a local property manager to rent out the property for the first year. Then during her 2nd year, she moved in along with a roommate that paid me rent. After she graduated, I had the management company rent the condo out and still have it as an investment property today. Having a rental unit in an area near a college is good as there is typically a good demand for rentals, regardless of the ups and downs of the economy.
Talk to your Realtor to get some ideas of properties and price ranges. If the school is far away, they can get you in touch with a Realtor in that area to assist you.