Buying an investment property can really take a bite out of the cost of education!
As a parent with a child living away from home while they are attending university or college, you are no doubt aware of the high cost of housing. If your child has been looking for rental housing you probably have heard them complaining about the scarcity of quality rentals.
For some parents, the solution to these problems has been to buy a home for their little darling(s) to live in while they go to school. Done right, this strategy can really take a bite out of the cost of your child’s education.
So how does it work?
Buy a home near your child’s school, your child lives in one bedroom and brings along some of their friends as roommates who pay rent. The “tenants” all share in the utilities and expenses and the rental income pays some or all of the mortgage. At the end of your child’s last year you sell the property. Most of our clients who have done this end up having their child’s living expenses significantly reduced or eliminated altogether. In addition when you sell the property you could end up with a nice profit as well. We have actually had clients who have made enough money on the resale of the home that their child’s education ended up being free. Now there’s a good deal!
So what does it take to do this?
This strategy is now available to even more parents due to a couple of programs now being offered by some of our lenders. You can now buy a “2nd” home for your son or daughter to live in with as little as 5% down. The down payment can come from a variety of different sources, such as , savings, equity in your principal residence, or you may even be able to borrow it.
January to March is the high season for student property in the City of Guelph. We traditionally will see a large number of properties coming on the market during this time. We will also see an equally large number of buyers come in to the market. Getting your financing in order prior to this time is extremely important as the better properties sell very very quickly. You need to talk to your bank or mortgage professional who is experienced in this area can get you pre-approved for financing.
You should also familiarize yourself with the City of Guelph’s shared housing rules and regulations, fire and building codes. A Realtor®who is experienced in this area is an invaluable resource.
Here are some links to some information that you should be aware of: