Make College Condos Pay for Themselves

image source: Shoko Design

Okay, so maybe not pay for themselves entirely, but significantly.  And we aren’t talking about doing anything unconventional in the structuring of these mortgages.  Just a few small steps that can save lots of money.

So your kid is going to college or graduate school, and you are thinking about investing in a condominium for that duration.  Here’s what you do . . .

Step 1:  Student opens a credit card.

This is for the purposes of establishing a credit rating which is necessary for your son or daughter to be included on the mortgage.  Charge items to this card and pay the bill on time.

Step 2:  Co-purchase condo w/ student as owner occupant.

Your son or daughter then gets an owner-occupant mortgage on the condo with you as a co-borrower.  This is where much of the savings comes from since an owner-occupant mortgage has many advantages over an investment/second home mortgage including a lower downpayment and better rates.

Step 3: File for homestead exemption on property taxes.

Since your kid has purchased the condo as an owner-occupant and is living there, he/she may file for homestead exemption and save significantly in property taxes.

Step 4: Reduce mortgage payments by renting additional rooms to friends.

If the condo is a 2 or 3-bedroom, rent on the additional rooms can help greatly offset the mortgage (which, you’ll remember, you got at owner-occupant interest rates).

Step 5:  Sell condo at a profit.

Hopefully you used a competent real estate agent (hint, hint), and you bought at a fair price and location.  Four years later and barring any market crashes, you should be able to sell at a profit to the next set of parents looking to do the same.  There is always a demand for college condos since there is always an influx of inhabitants.

Afterwards, your son or daughter will have a stellar credit rating, and you will have spent a fraction of the cost of four years of rent.  If you are considering investing in a college condo for your kid, I can’t imagine why you would do it any other way.

P.S. Did you notice the kitchen in the featured photo uses the “warmth + contrast” idea discussed Thinking Outside the Kitchen Reno Box post?