A recent list of the top 10 college towns to invest in real estate by HomeFinder.com names Baltimore, Grand Forks, Mich., and Cleveland in the top three spots. If your child is headed off to college, buying a property in their new home away from home can be a lucrative investment. But before you do, here are a few tips to consider:
• Have a plan: “Remember that college is four years – or a couple years more – depending on your child,” says Doug Breaker, CEO of HomeFinder.com. But even after your child graduates, you’ll still own the property. “Have a plan for when your child graduates, whether you’re going to sell the house or keep renting it out,” he says.
• You’ll be your child’s landlord: Becoming your child’s landlord can present a great opportunity for life lessons in real estate, if you have your child manage the property for you, Breaker says. On the other hand, “if there are roommates in the house, dealing with credit checks, background checks and collecting rents possibly from your child’s close friends, that can definitely have issues,” he says.
• Seek help for your property: Don’t be afraid to enlist a service to facilitate background checks or rent collection, which can help simplify your duties. “You can use things like Angie’s List to generate a really nice list of trusted vendors, whether that’s painters or electricians or plumbers,” Breaker says. If your real estate is out of town, look for a property management firm to help manage it.
• Protect yourself legally: Breaker recommends having good early termination and dispute resolution terms in any of your leases. “Especially with college students, it’s great to have really clear language on repair allowance, down payment allowance and down payment return terms,” he says.