- The Washington Times - Thursday, September 22, 2005

From combined dispatches

Dale Mattison sent his 18-year-old daughter to the University of Maryland last month to live in a college dormitory, but after her “freshman experience,” he plans to house her in a condominium near the campus.

“If you have to pay for housing, why not pay for one that’s going to give you an investment return, tax benefits and equity buildup at the same time?” said Mr. Mattison, a Washington real estate broker.

More parents are viewing their children’s college experience as a step up the property ladder. As the real estate market has soared, so have parents’ interest in off-campus housing.

Historically low rates and flexible financing have driven the trend.

The National Association of Realtors found last year that 6 percent of investment purchases, or about 169,000 properties, were for a child to use while attending school. It was the first time the association had asked the question, so a year-to-year comparison was not available.

“We just started to hear about it,” said Walter Molony, a spokesman for the association.

Many parents would rather buy a condominium or house than pay the steadily rising costs of campus housing.

The College Board reported that the average room and board cost for the 2004-05 academic year was $7,434 at four-year private colleges and $6,222 at four-year public colleges.

The college market is perceived as a secure real estate investment because of the steady flow of incoming students.

Parents can write off mortgage interest and property taxes, then either sell the property at graduation or keep it for rental income.

“It’s very common in our area,” said Joyce Roper, a real estate broker for Remax Sails Inc. in College Park. “It also gives the kids an opportunity to learn about business. If they can get some friends together and get some rent, it gives them a good lesson in business management.”

The Washington area offers a wealth of job opportunities when students graduate.

“They can buy a house here and not have to move for 10 or 15 years,” Mrs. Roper said. “As the house appreciates in value, they’ll be able to leverage that into a nicer house.”

In Austin, home of the University of Texas, the heaviest buying season for parents is between April and August, said Mark Orr, manager of Texas lender Colonial National.

More than 48,000 students attend the university. “There’s always a demand for housing, and a shortage of rental properties,” he said.

A two-bedroom, two-bath condo, popular among parents, sells for about $185,000, and Austin’s fast-growing population makes it a hot real estate market, Mr. Orr said.

Nicole Persley of Real Estate of Florida often works with parents who want to buy condos for students attending Boca Raton schools and the University of Miami.

“The smartest move is if the parents have two or more college-bound kids at the same college,” she said. “It’s a no-brainer to buy versus rent or live in a dorm.”

Nancy Flint-Budde, a financial planner in Salem, N.Y., advises buyers to consider several factors, such as a long holding time in the event of a market dip. “It’s not a get-rich-quick scheme,” she said.

Taxes and mortgage interest, although a tax write-off, may cause a cash-flow crunch, she said.

Although renting is an option, some parents might be ill-prepared to be landlords. Parents might need to hire an agent to manage the property, especially if the condo or house is out of state.

Also, Miss Flint-Budde said, parents should consult a tax adviser about the differences between treating the property as a second home versus an investment property.

Staff writer Tom Ramstack contributed to this report.

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