How and why to Buy Real Estate in a College Town

Even in a shaky real estate climate, certain areas of the country remain seemingly untouched by the housing crisis, and college towns are no exception. In the wake of plummeting property values, college town real estate has a proven track record of stability. The recurring influx and stable population density makes college town real estate a potentially positive and long-term investment for parents and real estate moguls alike.

*Reasons to buy

Over the last few years, real estate agents in popular college towns across the country have noticed an increase in parents seeking homes for incumbent students. These parents see the value in buying property instead of paying up to $10,000 a year on room and board for students living on campus. For these parents, snatching a second property and subsequent tax deduction makes sense.

After these parents turned investor usher their offspring from college to adulthood, they can hold the asset and continue to rent it to incoming students, giving the property long-term investment appeal, if the parents can handle being landlords.

Parent investors can also opt to sell the property once Junior graduates. For parents investing in a property for the duration of their child’s college career, a gain on their investment year over year also offsets the high pre-set costs of room and board, netting a solid one-time return on their investment. The beauty of buying real estate in a college town for most parents, however, is the simple fact that they remain in the driver’s seat when it comes to what they are willing to pay for room and board by taking money pits like overpriced dorms and apartments completely out of the equation.

However, parents are not the only folks who see rental benefit on the collegiate scene. Investors of all shapes and sizes have also caught wind of the fact that rental properties are more profitable than they were a few years ago, due in part to increased demand. Investors can scoop up several cheap investment properties in college towns, then flip and rent, turning long-term profits.

*How to buy

Buying real estate is a simple proposition for most buyers. Find a property you like, contact a real estate agent and work out the financials. Today, many transactions are negotiated and completed via email and electronic document signing services. The flexibility of today’s transactions often means that real estate buyers or investors do not even have to travel to the house to complete a home purchase, making buying an investment property in a college town easier than it was even three years ago.

It is important to note however, that the rules for buying a second home or investment property vary from one state to another, and any home purchase impacts both your federal and state income taxes. Before jumping on the college town real estate train, make sure you do your homework if you are serious about making the grade.