2 minute read.
It’s that time of year when your high school children are deciding where they are going to attend post-secondary school in the fall. Where to live is an important part of that decision which might get you thinking: should they rent or should I buy a property for them to live in? Here are five things to consider before making that decision.
1. What Is The Market Like?
Research the local market. It would beneficial to take a road trip to the city and meet with a local real estate representative. They will be able to give you an idea of the overall real estate market conditions. It is really important to look at year over year prices to determine the return on investment (ROI) if you sell the property when your child finishes school.
2. Are They Committed To The School?
According to the National Centre for Education Statistics, 1 in 4 university/college students will either change to a different school after their first year or drop-out altogether. Also, if there is a chance that your son or daughter might not finish school, do you really want to purchase a rental property for them? This will leave you with a lot of risks, especially having to be a landlord.
3. Do You Even Want To Be a Landlord?
Even with the best of tenants, being a landlord comes with its own set of challenges. Add on the fact that your tenants will all be students, perhaps your own children, experiencing their first taste of living without their parents. The biggest opportunity here is that owning a rental property in a university/college town almost guarantees a lifetime supply of renters.
4. Are You Financially Prepared?
Before signing any offers, meet with a mortgage broker to determine what you can qualify for. Determine where your break-even point is and when profits will start to be realized. You will have to remember to make room in your budget for extras. Repairs and damages typically happen more often in student housing. You may also need to consider property maintenance, lawn care and snow removal if you reside in a different city.
5. Have You Considered the Tax Implications?
Speak to an accountant. Owning and renting out a student housing investment property can have its own set of tax implications. This is something you definitely want to research before making a decision. There are a lot of things that are going to affect your taxes. Is it in another province? Is it going to affect your child's taxes? Will the rent from the other students be taxable income? These are good questions to ask your accountant before making a decision.
With all the things to consider, buying your child a student house to live in is a big decision. It would be my pleasure to sit down with you to discuss your future goals and create a plan to meet them.