As a mother of two whose kids both decided on post-secondary education away from home, the first thing (of many) that came to mind was where they’d live after the first year of residence – something I think most parents wonder (read: worry) about – especially if it’s your first time around sending your child off to school.
My daughter spent her first year in residence at Laurier’s Brantford campus and as her second semester started up – so did questions about where she would live come second year. My husband and I had briefly talked about the idea of purchasing a home in Brantford and renting it out to my daughter and her friends, but, as with any investment, there were still a lot of things to consider. So, to help you gauge whether or not this is something worth considering for your own child, I’ve put together a summary of our personal experience and thrown in some helpful tips for good measure!
I’d say first and foremost, that it’s important to take into account the housing market of the city you’d be looking to buy in. Brantford, for example, is experiencing a considerable amount of growth but still has some ways to go – which has translated into lower housing prices in and around the downtown core. If your child is attending a post-secondary school in a larger, more developed city, this will be reflected in the higher cost of housing. Another important tidbit is how much students typically pay in rent. We had five students living in our house and each paid anywhere from $475.00 – $500.00 per month depending on the room size whereas students attending other Universities or Colleges are expected to pay upwards of $700.00. Keep this in mind when shopping around as rental income should help to offset your total carrying cost. It’s also important to go over, with the help of your child, what to look for in a home.
Our criteria looked something like this:
- Walking Distance to University
- Safe Neighbourhood
- Enough bedrooms (Actual bedrooms – not dining rooms that had sheets acting as doors!)
- Enough bathrooms (Our goal was 2 bathrooms split between 4-5 girls)
Depending on what University or College you’re looking at, finding something within walking distance may not be realistic given the way the campus is designed. My daughter’s friend attended Brock and lived in Thorold , for example. In that case, you might want to look for a house that is close to transit/on a bus route. I’ll be honest, when we first started looking, we found places I wouldn’t put my worst enemy in – and I wish I was kidding! Despite having access to listings as soon as they hit the market, we ended up finding the perfect home on Kijiji, believe it or not! It was a gorgeous Victorian home that belonged to two professors moving to North Bay. Immaculately maintained and tastefully updated, I was just about ready to move in myself! Initially we had four girls living in the house but a year later, a friend from home was transferring schools and asked to move in. With a budget in mind, we converted a room in the basement to a bedroom and the main floor powder room into a 3 piece. We decided to install new windows throughout and insulate the attic using the government incentive Energy Audit as our ‘motivation’ if you will. Now, these are by no means necessary upgrades but we went into this knowing we would likely sell the home once my daughter graduated and wanted to add to our resale value.
Insurance. This is something that, to be honest, took quite a bit of effort to finagle. Typically, insurance companies frown upon this many roommates because it can be viewed as a rooming house. Be sure to check with your insurer before you do anything. We ended up getting insurance and everything was done legally. The last thing you need is a lawsuit on your hands should anything go wrong! Ask the right questions, and then ask them again if you still aren’t sure! Another thing to consider is how far away the income property is from your residence. If something goes wrong, are you prepared to hop in your car and replace the toilet that leaked all over the floor? Or fix the washing machine that’s “making that weird dud dud dud noise again!”? If the answer is “no”, or “Oh boy.. didn’t think of that”, then you might need to take some more time to figure out if this is something you’re ready for. If you’re planning on purchasing a home in Ottawa, for example, and you live in Ajax, that’s quite the drive should you get a call that something’s broken. If that’s the case, you might want to consider hiring a company to take care of things like snow removal, or lawn maintenance. As with any form of home ownership, investment or not, it is your responsibility as the homeowner to ensure everything is in working order and that you fix things when they’re not.
Regardless of the distance, be prepared to get the calls – and I mean ALL the calls! Remember, these renters are still youngish and for many, it’s truly their first time living on their own. Set your rules but be realistic, have them sign the lease agreements and keep it formal. Friends or not, you have to ensure that they respect your property, your investment. I would also recommend keeping your relationship between your child as a child and as a renter, separate. You don’t want your child to be the go to person instead of you as the landlord. They are learning to live with each other and this can add more stress. If something is wrong, broken, making “dud dud dud” noises again, or the lightbulb in a room is burnt out, ensure everyone in the house knows that you are the one to call. We definitely had our daughter help us out by going to Home Depot to grab a few things if they were needed and we couldn’t make it up, but do your best not to make a habit of it – they’ve already got a ton on their plate!
Speaking of a ton on their plate, University and College, especially in a new city, can be as scary as it is exciting. It’s important to ensure your child is truly committed to attending school for the full term. It’s a lot of work and sometimes it’s just not the right time, program or place and that’s OK! But, you need to know that before you invest tens of thousands of dollars into a home for them to live in. If it so happens that perhaps University or College just isn’t for them, worst case scenario is you keep it as a rental investment or you sell.
Now the numbers. When working the math on initial investment (purchase price), upgrades or capital costs, and rental income along with property taxes, it is very wise to consult with your accountant. We were fortunate in that even after our selling price (at a profit), improvements, and capital gains, we were still ahead. More importantly, we were able to provide a safe, lovely and comfortable home for our daughter and her friends. I’m sure it’ll bring them all lasting memories of their years away at University. It made the parents of the girls happy too to see that we were caring landlords.