Investing in Kiddie Condos Instead of Paying for College Dorms


    As college tuition increase across the United States, families are finding that the cost of their children living in dorms is also increasing. For certain scenarios where out-of-state tuition plays a factor, some families are realizing that buying a condo for their new college student and renting out the additional rooms to roommates can save money in the long run, all while building wealth! 

    Realtors are calling this strategy “buying a kiddie condo,” named after an FHA loan that is designed to provide a way for parents to help their young adults into a home. The strategy is to allocate funds that you would spend on college expenses (like meals, room and board, and out-of-state tuition) into a property. In addition to savings, you reap the benefits of getting rental income, while simultaneously helping your child build wealth and credit. With these additional benefits, sending your child off to college gets a bit easier and the numbers start to make a lot more sense. 

    This concept of kiddie condos is more realistic in areas where property costs are relatively low and state laws are friendly to college students who would like to establish residency. University of Florida in Gainsville is a popular destination for this concept, as the median sale price for a home is about $180,000. With rental rates increasing in apartments and a large supply of condos near campus, kiddie condos are becoming more popular each year. Universities are realizing the influx of off campus condo dwellers and are expanding school bus lines to accommodate and serve the condo communities. A big win and very convenient for students!

    However, let’s keep in mind that kiddie condos are not for everyone. If your child has a scholarship, it wouldn’t make sense since room and board are covered by the university. Additionally, rules to gain residency varies by state. If gaining residency is difficult, this can affect tuition cost, which can eat into your overall rental profit. For example, in Pennsylvania, a student must have a reason other than school to live there and be 21 years old to claim residency. In California, to establish residency under the age of 24, you must be able to verify you have been financially independent for 2 years prior to the term you want to enroll in college. In states with laws like these, your tuition cost is almost doubled, making a kiddie condo not justifiable.

    If you’re new to investing, a seasoned investor or simply a parent looking to find a smart affordable option to help your child go to college, I recommend working with an experienced agent who understands the laws within that state and the liabilities involved renting by the room.

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