College Costs & Real Estate

Last week I did a tour of college campuses. My two eldest daughters (twins) are seniors in high school this year, and I am starting to go through the rituals of colleges. You know: asking the kids where they want to go, what they want to study, setting up campus tours, meeting with admissions counselors, and lastly, picking myself up off the floor when I see the “estimated annual costs”. Holy Cow! I’m certain that this is how my folks felt during their rituals, but I certainly don’t remember college costs being an annual wage! What the UC system saves in tuition costs, they more than make up for in college housing expenses.

One advantage of having been a loan officer for many years is that I see many innovative ideas that parents have had in meeting the college expense challenges. The one idea that really stuck with me over the years is when the parents bought the kids a house to live in at college. I have seen this done many times, and this is how it seems to best work. Parents find a house close to the campus to buy. The requirements for the house aren’t much: as many bedrooms as they can afford, large hot water heaters and basic appliances. Above all, no swimming pools, spas or any high maintenance yards or such.

The child/student can now live in the house and rent out rooms to fellow students. Many times the rooms can be rented for more than the monthly house payments while the owner’s child will live free. An added benefit for the parents is the child now gets a real world education in managing rental property. When the student graduates in 4-5 years, the house is sold. In the times that I have seen this done, the house has appreciated enough in value to cover the entire college costs!

Obviously this scenario doesn’t work everywhere or for everyone. But, when you are laying on the floor after seeing those “estimates” (and doubling it for twins) ideas like this flit through your dazed mind.

Fixed Interest Rates for Conforming Loans (under $333,700) as of 8/20/04 (a.m.) are:
(rates quoted are for 0 point loans, for a 2 point loan subtract about half percent in rate)
30 year fixed: 5.75% (APR 5.84%) payments are $1,947.38/mo.
15 year fixed: 5.125% (APR 5.278%) payments are $2,660.58/mo.