Purchasing property during college

Buying a home is possibly the biggest purchase of your life. Is it a good idea to buy property while you’re attending school? It could be, if you take on renters to share your costs. But first, you need to ask yourself some serious questions.

Can I afford it?

There are three main points to consider: Do I have the cash for a down payment? Will I be able to make enough rental income from the bedrooms and living space? And if I have unexpected gaps between renters, will I be able to make the monthly mortgage payments?

If you answered yes, then it's possible you might be able to own rather than rent while going to school.

What’s the upside?

Instead of paying rent, which goes toward somebody else's mortgage, you pay your mortgage and hopefully build equity in your own home. When you sell, your residual value in the home could be used as a down payment on another home, invested in your business, or set aside for your future. Nice choices to have, don’t you think?

Sometimes getting a better education takes longer than you imagined. A four-year degree can take five years. An undergraduate degree can become a master’s degree or even a Ph.D. But this time can work in your favour − the longer you rent out your property, the more equity you might build.

Aside from the financial benefits, there’s also pride in ownership. You can choose the home and neighbourhood you live in. And enjoy the satisfaction of being part of a community. Plus, you get your own space. Which is usually larger than a student dormitory. You can even have your own yard. Think of the possibilities.

It can’t be that easy?

Becoming a landlord is a business decision. And with that comes costs and risks.

Remember to set aside funds for property taxes and utilities, including water, sewage, garbage and recycling. And to buy adequate home insurance to protect your investment. Then there's maintenance and upkeep, plus little surprises like late or unpaid rent, and vacancies.

Then there are the rules to follow as a landlord, which you’ll need to study. They can put an extra load on you when you're already busy with school.

Remember, real estate markets can change. Dramatically. If you need to sell because you switched schools or whatever, it’s not like being a tenant. Your home can take a long time to market, especially if you have to work around your tenants' lives. And there is no guarantee it will fetch as much as you paid for it.

Take all these costs and risks of being a landlord into account before deciding whether to begin your education in home ownership while you are in school.