Housing Your College Student in Charleston

If your daughter or son is attending one of the many colleges in Charleston, SC, you have several housing options. While many students will choose to live in a dormitory or rent an apartment, you should also consider buying a home near campus. Owning a rental home can be a worthwhile financial investment, as well as an educational experience for your child. Purchasing the property your student lives in while attending school offers many benefits:

• Stability. Your student will be in the same location during their college years. There will not be a need for yearly apartment hunting.
• Storage. Furniture and other belongings can remain in the home while you own it, saving both time and money.
• Fixed expenses. Generally, rent in Charleston increases every year. The average rent in the downtown area is nearly $3200 per month. By buying your property with a fixed rate mortgage, the housing expense will be fixed for the duration of ownership. Keep in mind, you will also avoid paying security deposits and moving utility services.
• Responsibility. Your child receives a lesson in real estate investing as well as the responsibility that comes with owning property.
• Financial benefits. Your financial gains include possible appreciation in value, equity build up and the opportunity to charge rent to housemates.

Of course, there are some things to watch out for when considering buying a home for your student. College students are generally on the move, so staying in one location for four or five years could present a challenge. If you rent rooms in the home, you become landlords and your student may have to deal with irresponsible housemates. General maintenance costs are also something to remember when purchasing an investment property. Be sure to factor additional expenses into your formula.

FINANCING OPTIONS

When it comes to the actual purchase of your investment property, there are many options available for the title and financing. Some parents include the student’s name on the title for owner-occupied tax benefits, while some opt to buy strictly as a rental property. There are several ways to hold the title, so speak with your attorney and tax advisor to determine the best route for you.

When you have decided to move forward with a purchase, your lending institution should offer several strategies. If your student will be named on the title of the property, using a FHA “kiddie condo” loan is a good option. This program allows your student to qualify for the loan as a co-borrower with a blood relative. There is a maximum loan amount, so check here for limits in the location of interest. Another option is to use a non-owner occupied loan with conventional financing. Interest-only loans are also available that may have a lower monthly payment.

Should you wish to rent extra rooms to supplement the mortgage payment and share expenses, have each housemate sign a written agreement. Standard rental agreements can be obtained through your real estate agent or lawyer. The rental document needs to address the term of the lease, rate and due date for payments, security deposit, parking, pets, utility payments, maximum occupancy and notice to vacate.

When your student graduates or is moving on, you have several options. You can keep the property as an investment rental. If you have another child who attends the same school, you can make a similar arrangement with him or her. You can also exchange the home for another investment property in another location in a 1031 exchange. Or you can always sell the property and realize any profits from increased value.

Disher, Hamrick & Myers has homes for sale near the College of Charleston and MUSC that would make ideal student residences or investment properties. Buying a house for your college student has many advantages. To learn more and decide if this is the right strategy for your family, call us at 843.577.4115 today.