More parents purchasing properties for their students in college towns

If you live in a town with a college or university, you may notice a surge in business due to the latest trend.

An increasing number of parents are purchasing properties for their children to live in while they are enrolled in college.  In a recent informal survey of its sales associates, Coldwell Banker found that in the past two years, more than one-third of agents surveyed across the country are seeing more buyers looking to purchase properties for their children now than in previous years.

Why now? According to respondents, some parents are taking advantage of low prices and interest rates, while others are concerned housing may be limited when their child enters school.

Additionally, if there is a scarcity of rental properties, or residential living areas on campus, rent for these properties could continue to rise as demands grow. Also, many colleges and universities limit the number of years a student may live on campus, forcing them to relocate off-campus while finishing their degree.

“Any college parents who face paying $7,000 to $15,000 annually for their kid’s dorm room or rental over four or more years can redirect those payments into a rental property as a money saver,” Dan Gooder Richard told Forbes. Richard is author of the book Smart Essentials for College Rentals: Parent and Investor Guide to Buying College-Town Real Estate.

Some parents purchase larger properties, and rent out the additional rooms to other students to help offset the cost of their purchase.

Once their child graduates, parents can either keep the house as a hopefully lucrative rental property, or put it back on the market, and try to appeal to other parents in similar situations.

While interest rates are still moderately low, but tuition and student housing rates are continuing to rise, investing in a rental property may make the most financial sense to you client.