Consider Investment Properties For Post Secondary Students

Investment Properties For Post Secondary Students

How time flies. It seems it was just yesterday we were teaching them to ride bikes, holding their hands while walking them to school and baking cookies on a Saturday afternoon.

Today they are young adults:

  • Independent thinkers
  • Engaged politically
  • Responsible drivers
  • And now off to pursue a post secondary education

I was recently back in Kingston last month and while driving downtown I took a drive through Queen’s University. Navigating through what is referred to as the “Queen’s Ghetto” I discovered that the city had been invade by a convoy consisting of every cube van, moving truck, Uhaul, trailer, minivan and any other transport devices that could transport household belongings. Now I remember, it was the end of term, April 30th, and parents had come to pick up their young academic as well as all their worldly goods for the trek back home for the summer.

This end of term migration happens all across the country in any city or town that is blessed with a college or university. Whether the University of Toronto, Carleton, Ryerson (my school), McMaster, Waterloo, York or Laurier these students will be spending at minimum 4 years in pursuit of an undergraduate degree…and longer if they continue onto their masters.

According to a 2009 TD economic report, the cost of providing a 4 year undergraduate degree for an out of town student can be well over $80,000. Tuition and housing are the two largest expenses so if you have the means purchasing a student investment property might just be the way to offset some of their living expenses.

What a parent might want to consider is purchasing an income property with the specific purpose in renting rooms out to post secondary students. Here are some things to consider:

1. Location, location, location is the key to buying a student income property. Look for a house that has easy access to local transit and is within acceptable walking or cycling distance to and from school. Remember, traveling distance is critical to students and a long daily commute is not something most will entertain.

2. Consider a 4 to 5 bedroom house with a shared kitchen and other common rooms. Since is the first time leaving home your child will expect to have his/her own bedroom and so will their house mates.

3. If you plan on purchasing the house in your name for your son or daughter, hire them as the property manager so they can collect rent and pay utility bills. You should pay them to get the deduction, but what they will learn relating to business/property management will be invaluable.

4. Another alternative is to have your son or daughter purchase the property with you providing the mortgage. In this way you will get a return on your investment; you’ll avoid the capital gains and upon resale your child will (hopefully) reap a tidy windfall, which will get them started for life after university.

Some municipalities have no issues with student housing rentals, while others strictly enforce bylaws to curtail student housing… so it is best to do your homework.

Post secondary education is an incredible experience and as parents we are all looking for ways to support them.