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Invest in Real Estate to Decrease College Costs


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Thursday, September 10, 2015 — Student loan debt approaching is 1.2 trillion dollars and the 2015 graduating class has a larger amount of student debt than ever before — $35,051, according to a prior USA Today article .


It’s no surprise then that students — and their parents — are looking for any opportunity to shave costs. But what options really exist?


It turns out investing in real estate might just be the solution we’ve been looking for. This option would allow students to save thousands of dollars, about 54% of College Board’s suggested budget for living expenses.


While that sounds like a fantasy, it’s actually a possibility for many students. The secret lies in parents purchasing property and then renting out rooms to other students, according to Jennifer Fredericks, a broker at Better Homes and Gardens Real Estate Preferred Living that has worked in real estate for the past 21 years.


“I think it’s a trend that happens in a lot of large college towns,” she says.


It’s at least a trend in College Station, Texas, home to Texas A&M University. Frederick estimates that “approximately 25-30%” of purchases in her area are parents purchasing property for their students, and this number is increasing.


The process involves parents seeking and mortgaging a house for students after their freshman year of college. With multiple bedrooms, students then invite their friends to live with them— the rent charged to roommates covers the cost of the house. This allows parents to help provide students free or nearly-free housing.


“Parents can make back the money they’ve invested in it,” Frederick says.


She cites that the college real estate’s market stability is a reason why it’s such a successful investment for parents. Many articles have argued that college campuses provide a unique market consistency given that students are always entering the school and therefore need housing in the area.


Ken Fenoglio decided to capitalize on this trend and purchased a property for his son Jake after sending his other three children to college.


“Jake was my fourth child to attend college and I had always paid some other landlord or student’s parents rent for the other three. I decided I wanted to try to be the one renting out the property.”


Ken proceeded to purchase a property and discovered renting was “much better financially than renting from others or campus housing.”


He also believes having Jake rent the property aided in giving his son real-life experience with managing property. He was responsible for advertising and screening candidates, signing contracts, collecting rent and maintaining the property.


The living arrangement was actually so successful that Jake decided to purchase the property from his father after college. His father handed the property to him, giving his son the entirety of the house’s equity gain. Jake says this made the deal a “no-brainer.”


To view the original article, click here: http://college.usatoday.com/2015/09/03/real-estate-investments/


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