Warning: getimagesize(): Filename cannot be empty in /home/blackenterprise/public_html/wp-content/themes/blackenterprise/single-standard.php on line 35
If you send your child away to college, room and board will be a major budget item. The charges are the second most expensive part of college. On-campus housing averages $8,000 a year, and over four years you can expect to pay $30,000 or more per student.
Lesson 3: Housing
To save on room and board, consider a housing purchase. One way to trim this cost–and possibly turn a profit–is to buy your child a place to live near campus. In many markets, housing prices are appealingly low, even in some college towns. When your student graduates, you might sell the property at a gain.
Even if you just break even on the real estate, you could save thousands of dollars in room and board. Tax breaks can increase your chances of coming out ahead, especially if you buy a large apartment or house near campus and rent to multiple students. You’ll collect rent while you take all the tax deductions available to owners of investment property: operating costs, maintenance, depreciation, etc. If you name your child as property manager, you could pay him or her a reasonable management fee, which will be deductible for you, the property owner, while your student might owe no tax.
“As with any real estate investment, you have to do your homework,” says Stewart Welch III, a financial planner at Birmingham, Alabama-based The Welch Group. “Spend some time exploring the neighborhood. You’ll want to find a home located near campus, preferably within walking distance.” Finding an appealing spot will help to attract tenants and make it easier to eventually sell the property, perhaps to the parents of an incoming student.
Robin White Goode is the co-author of this story.
In the series: