Here are a few questions you’ll need to ask yourself when deciding to rent or buy a house for your child.
Can you afford an investment property?
Before you do anything else, we suggest meeting with a financial adviser. Houses are an asset, but can also be a liability (mortgage payments, etc.). You’ll want to consult a financing professional and make sure that you can afford an investment property.
Will you want to keep the property after your child graduates?
How long you would want to own a rental property is an important factor in deciding whether you should buy or not. If you’re only interested in owning the property while your child is in school, the overall return on investment may not be worth it. If you are interested in keeping the property after your child graduates or moves away from town then buying may be the right choice for you. Just remember to consult a professional and do your research on the market.
Are you willing to manage the property?
Property management can be a huge responsibility. When looking at properties to buy, be sure to consider how much routine maintenance it will need and the likelihood that something major could break. If you’re a novice to property management and have no interest in learning, it might be worth it just to hire a property manager. Maintenance and unexpected costs need to be factored into your budget for buying a rental property.
Will your child (and other roommates) be good tenants?
Be honest: will your child be a huge liability? If so, you might consider renting instead so that someone else can pay the insurance deductibles and repair costs that come with an irresponsible tenant. Also, you may not want to buy if you’re uncomfortable with any of your child’s roommates. Being your child’s parent and a landlord is difficult if your child can’t be trusted.