originally posted in Towne & Country, Realtors Blog:

It is summer vacation, but for some of the parents of college-age young adults, it is number-crunching time.

Many savvy parents are purchasing investment property near college campuses in lieu of spending a near-equivalent amount on room and board. In our area,  there are at least 14 local colleges in Lowell, Worcester and Fitchburg. Investing can make sense on several levels.

HGTV’s Front Door points out possible benefits of a home or condo purchase for your college student:

Stability. The student won’t need to look for a different apartment to live in each year. In addition, you can pick the lifestyle that will help your student succeed in school by choosing the location and the quality of housing that best fits their needs.

Fixed housing expenses. In the past, apartment rents in Boulder have typically increased on an annual basis. By purchasing a property with a fixed rate mortgage, your student’s housing expense will be fixed. In addition, you won’t have to deal with paying security deposits or going through the hassle of getting the deposit back.

Storage space. Having a single place to live in that you own means your student will not have to worry about storing furniture over the summer break.

Life lessons. By purchasing a home for your student, you’ll be providing him/her an excellent learning experience. Your student will not only learn about the process of investing in real estate, but will also learn about the responsibilities that go along with property ownership.

Financial benefits. Potential financial benefits include possible appreciation in value, possible tax benefits, and debt reduction on an amortized loan which increases equity build-up.

The authors of this post had actually “walked the walk” – they had purchased condos in Boulder for each of their two college-aged students.

If you are thinking of going this route, it is important to do your homework. Anthony Seruga in eZine suggests:

From the perspective of a real estate investor, there’s a lot to commend this as an investment opportunity, even on the small scale, just buying a condominium for your college age student to sell when they graduate. First, housing demand in college towns is inflexible. It doesn’t wax and wane with the job market, local industries, or nearly anything else. Second, it’s a market where rent increases are expected nearly annually, so you can keep a solid cash flow going. Third, with a bit of scouting around, you can find the markets that give a near constant occupancy rate. That scouting is called searching out the “bed to student” ratio.

The cost of the mortgage of the property will probably not be much more than the cost of room and board at the school, but – just like in any typical home-ownership – you need to factor in other expenses to make sure that this type of property investment works in your particular situation. Run your numbers by a trusted Realtor.

And there are benefits to this investment arrangement that are not typically considered. According to an article in MSN Real Estate:

One additional bonus: That campus crib might keep the kids from “boomeranging” back home, as nearly half of this year’s college graduates plan to do, according to a survey by online career resource MonsterTrak.

My daughter is in her last year of school in Boston, and looking at what I spent in room and board, it probably would have made sense to invest in the area.