Buying a home is usually the last thing on the mind of a college student. It’s time consuming, requires upkeep and usually takes money that most students don’t possess. Also, qualifying for a mortgage is nearly impossible for most young students. Despite these difficulties buying a home may be a smart financial decision for parents or older college students.
According to the National Center for Education Statistics the average cost for room and board is $8,722. Over the course of a 4 year degree the average student can expect to spend $34,888 on room and board. This is a minimum cost since many students take 5 years to complete a bachelor’s degree. As a way to offset some of these costs many parents have been buying condos for their children to use while in college. With the economy, current mortgage rates and housing prices down, there are great opportunities that frequently allow families to save money on college expenses.
Chicago has many universities and community colleges. Most of these schools are surrounded by condos or flats that are sought after by local students. For example, in the north side of Chicago there are many condos that are located within blocks of Loyola University. It’s not uncommon to find a two bedroom unit in the $120,000 range. A mortgage payment would be around $540 plus taxes, insurance and any fees. Renting the second bedroom for just $250 per month would reduce the mortgage to a miserly $290 per month. Over 4 years this would amount to a little less than $14,000; a significant savings over the average room and board fees. Factor in the tax benefits of owning rental property and the cost of ownership goes down even further. Parents with more than one child can continue to extend this savings over many years before the home is sold or a reverse mortgage is used.
Property that is located near schools that have programs which require students to be on site often or with short notice are usually good locations. Medical, Dental and Law schools are programs that demand much from their students. At a nearby dental school it’s common for married students to purchase modular homes from a known neighborhood. These homes are regularly sold from student to student. Some students come out ahead after 4 years of dental school while others break even. Regardless, they were all able to enjoy the benefits of owning their home during a challenging time of their life.
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