The following article was written by Toronto realtor Michael McCann who also regularly writes for Zoomer Magazine.
How time flies. It seems it was just yesterday we were teaching our kids to ride their bikes, holding their hands while walking them to school and baking cookies with them on Saturday afternoons.
Today, they are young adults who are:
• Independent thinkers
• Engaged politically
• Responsible citizens
• Pursuing a post-secondary education
I was in Kingston last spring and while driving downtown I took a trip 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 type of cube van, moving truck, trailer, minivan and transport device that could move household belongings. It was the end of term, April 30th, and parents had come to pick up their young academics as well as all their worldly goods for the trek back home for the summer.
The end of term migration happens all across the country in any city or town that is blessed with a college or university. Whether it be the University of Toronto, Carleton, Ryerson (my alma mater), McMaster, Waterloo, York or Laurier, these students will be spending at minimum four years pursuing an undergraduate degree or longer if they continue on to a post-graduate program.
According to a 2009 TD economic report, the cost of providing a four-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 your child’s living expenses.
Parents might want to consider purchasing an income property in order to rent rooms out to post-secondary students.
Here are some things to consider:
1. Location is the key to buying a student income property. Look for a house that has easy access to local transit and is within walking or cycling distance to and from the school. Remember, traveling distance is critical to students and a long daily commute is not something most will entertain.
2. Consider a four to five bedroom house with a shared kitchen and other common rooms. Since this is the first time these young adults will be leaving home, each student will expect to have his/her own bedroom.
3. Consider hiring your child to act as the property manager where they would collect rent from their roommates and pay the utility bills. What they learn in business and property management will be a valuable skill in the workforce, plus they can add that experience to their resume.
4. Another alternative is to have your son or daughter purchase the property while you finance 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 profit, which will help get them started for post-university life.
Some municipalities have no issues with student housing rentals, while others strictly enforce bylaws to curtail student housing, so be sure to do your homework. The post-secondary experience is an important milestone in a child’s life and as parents we should always be looking for ways to support them.