GMAC Real Estate Invest in Second Home Real Estate, Not Dorm Fees
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Invest in Second Home Real Estate, Not Dorm Fees

Takeaways

  • College towns offer a consistent rental market.
  • Research the school’s policies on undergraduate housing, faculty rental referrals and other pertinent market data.
  • Target graduate students and faculty as your most desired renters.

Did you know?

  • Investment real estate is a great way to diversify assets.
A university town is a great investment second home location. Congratulations, your kid was just accepted to a university in another state. As the excitement wears down and you start looking at the various costs, you wonder is there some way to invest in more than your child’s future? Yes you can, and that investment is found in the form a second home.

Your kid will need to be housed at school and that comes with dorm fees, or other housing rental costs. If you own the real estate your kid lives in, that “rent” you pay is going into your second home. Not only are you essentially paying yourself for your kid’s college housing, you can even make money renting the rest of the space to friends and classmates while your kid is living in the second home.

Neighborhoods around universities and colleges are some of the most consistent rental markets for investment second homes.

Once your kid graduates there’s a steady supply of students each semester in need of housing. And the school employs a large staff and will always have visiting faculty in need of temporary housing. If you don’t have an interest keeping a second home that far from your primary residence, the real estate can be traded with a 1031 exchange for property closer to your home.

Do Your Homework

Like any real estate purchase the college town investment second home process is improved with a little research on your end. If you intend to sell the property after your kid is out of school, estimate how much the second home will appreciate over those years. One benchmark is if the second home will appreciate to match your tax bracket, that’s an investment to make.

If you intend to keep the second home to rent as a pure investment, get an idea what sort of rental pool you are drawing from with the students. Find out from the housing office the percentage of students living off campus. Also learn if any large group, such as all freshmen, are required to live on campus. You can get an idea of the rent you can charge by finding out what the student’s cost is for the school’s off campus units.

If the school allows private homes as rentals to the faculty, make this group your first targeted renters and advertise accordingly. Graduate students also make great renters. They are often married with a spouse who is working to support the grad student. Faculty and graduate students are more apt to treat your second home with care compared to undergraduate students.

Search for Second Homes for Sale

To search for a selection of second homes for sale, please visit lifestylehomesearch.com, or visit the website of a GMAC Real Estate Office that serves the area where you'd like to buy a second home. To learn more about buying Second Homes or Vacation Homes, explore the rest of this section, or contact a GMAC Real Estate Agent.