How to Profit from Students with Real Estate
While students make preparations for fall classes, their parents and grandparents could be researching the real estate market in the campus areas, regarding, making a profit from students. Investing in housing for students could not only be the answer for reducing the tuition bill, but also provide a source of income and even a tax deduction facility.
Various reports show that investing in real estate near colleges for using it later as accommodation for themselves, has been adopted by many families. The key element to being successful in this venture is in buying the right property. A family must determine whether the purchase is to make a profit from students or as a second home. For the first option, it would be operated as a business with equated costs and depreciation able to be deducted from the rental income.
Provided you purchase a one-to four family home, it is probable that you would qualify for a residential mortgage. Lenders would expect you to have a regular income and an approved credit score of at least “740 or higher”.
This type of accommodation to profit from students is frequently termed by lenders as “kiddie condos” and it is usual for the student to be included with the parents on the mortgage documentation. This enables the property to be designated as “owner – occupied” housing. Although most students attending college do not qualify financially to buy a home, the fact of them being recorded on the mortgage, is a help to them establishing a credit record and some responsibility regarding a property.
Some parents may consider refinancing their present property, or taking a home equity loan to finance the purchase of a second home. However, if the student is attending college in a distant location, then it could be advisable to consult a lender there. There is a particular advantage to parents who use a property as a second home and to profit from students. They are able to deduct the mortgage interest and property taxes, but can only claim relative to two residences.
Although interest in student housing has shown a steady increase, parents seeking property to purchase near colleges, could be confronted by some competition for student housing and a profit from students. About twenty five percent of colleges plan to construct on-campus housing, with about thirty nine percent expected to accomplish this within five years.