Buying a house for your university-student children to live in while they attend school can make a lot of sense, according to Melanie Chambers who looked at the issue for bankrate.ca.
"What surprises me is the sense of pride they have where they live -- it's clean, and they even have a schedule to clean the bathroom," said Nancy Lajoie after she and her husband bought a house for their son to live in, while he attended Ontario's University of Guelph.
Investing in a second house hasn't produced a huge surplus for the Lajoies, but rent from the five student tenants covers the mortgage and, in a few years, the Lajoies's younger son will also have a place to live during his studies, if he chooses.
If you plan on buying a house for the student in your family, read on to find out what is involved.
Where and what to buy:When trying to figure out what type of property to buy, a townhouse is a good bet. Choose one that has potential to increase in value, so when you sell it, you can help your child pay off any debts he might have incurred during his time at school.
Location is another important factor:At the University of B.C.for example, the homes close to campus are older and more expensive than townhouses further away from school, such as in Richmond, which has good transit service to the campus. It would also be less expensive to find local homes for students at Richmond's Kwantlen college campus.
Finding good roommates is key:Lajoie warns parents to pick wisely: "I recommend not having one group of friends. A couple of pairs works out best, otherwise it could become a party household."
The best scenario is always to have a family member live in the house. Whether it's a niece, son or daughter, you know someone is there, watching out for your investment. If you're an absentee landlord, things can get in bad shape. In general, family members have a good reason to keep the place in good shape. Also, in general, if there are no family members living in the house, the banks want more security up front. Real estate agents say many couples use the equity in their own home as a buffer.
An upside in Metro Vancouver is the potential equity in a home purchase, enough in some cases to cover some or all of the cost of a four-year university education.
