If your kid is heading off to college this fall, does it make sense to buy him a place to live? In many cities the answer is yes, according to website Cyberhomes.com. The site studied home prices and rents in fifteen college towns. In thirteen of them, the monthly mortgage payments and taxes are less than the local rents. For real estate investors, that’s called positive cash flow.
Now, honestly, nobody should buy a home just to avoid dorm fees for four years. But as a long term investment college towns can make sense. They have a steady source of tenants and are less dependent on the economy. The downside is high tenant turnover and a good chance they’ll trash the place on Saturday night. I remember a Realtor in Santa Barbara telling me that he bought a special (cheap) kind of carpet for the rental properties he owned near the state university. I think he called it campus carpet.
In any case, here are some college-oriented cities you might want to buy in:
• Oklahoma City, OK – Home Payment $764, Rent $1088
• Tampa-St. Petersburg- Payment $1074, rent $1506
• Lawrence, KS - Payment $1074,Rent $1506
And three to avoid:
• Los Angeles, Payment $3163, Rent $2270
• Eugene-Springfield, OR – Payment $1384, Rent $1272
• Fresno, CA – Payment $1432, Rent $1352