“For Those Who Can Afford It, It’s a No-Brainer.”
When Klew Yeh Mori’s son entered his junior year at the University of Portland, she made an unconventional decision. Instead of writing another check for a dorm room or off-campus apartment, the Salt Lake City real estate agent bought a house.
“I don’t have to waste money on rent anymore,” Mori was quoted in a Realtor.com report. “Now we’re collecting rental income from his roommates to help with household expenses. It’s a win-win for me.”
Mori is part of a growing cohort of parents who are purchasing properties for their college-age children to live in. They view this as an investment strategy that can pay dividends both during and after their offspring’s academic careers.
While not new, the trend has gained momentum as housing costs in many college towns have surged. Parents see an opportunity to build equity instead of paying for increasingly expensive dorms or rentals. “It’s almost certain that the demand will be there for rental properties in a college town,” Samantha Sousa, a real estate broker, said in the Realtor report. “With college towns, property values historically rise, so if parents decide to sell after a few years, they will likely benefit from the equity built.”
The Benefits
Parents like Mori see multiple advantages to this approach. The primary benefit is the potential to build equity rather than paying for temporary housing solutions like dorms or rentals. Over time, property values in college towns tend to rise, allowing parents to benefit from capital appreciation. Furthermore, collecting rent from roommates can offset mortgage and maintenance costs, making it a financially viable option.
Jay Voorhees, founder of JVM Lending in Walnut Creek, California, has seen the strategy pay off. “I have seen investors make hundreds of thousands of dollars buying properties for their college-age kids to both live in and rent out to roommates,” he said.
In a blog post, Voorhees noted that parents can access more favorable owner-occupied financing rates if their child is on a loan. “A kid does not need any income to be on the loan.
