Is buying a student condo for my child a good investment?

03/10/2011 00:00

While the price of laptops, smart phones and Pulse pens seem to get almost as much attention as tuition, the bulk of the cost for sending kids off to university is actually four or five years of food and lodging.

    And while there's not much you can do about grub, there are a few ways to offset some of those housing costs. 

    Instead of forking over even more cash to the university, some enterprising parents prefer to buy a nearby property for their children to live in during their university years. If you're thinking of buying your kids their own place, your kids won't need to look for a different place to live each year or figure out how to store furniture over the summer break.

    Sometimes a parent decides to buy a place for their children while they hit the books in university or college. It can be a good alternative to paying thousands of pesos toward residence fees or rent. Just look at the math:

Student rent of P10,000 a month = P120,000 a year = P480,000 over 4 years of school.

That money could go to your mortgage instead as an investment for you.

    In Manila, for example, you can buy a new studio condo unit for about P1,900,000. Or, buy a 1-bedroom for P2,300,000 and let your child’s roommate help cover the mortgage by paying rent. Let’s assume you pay 20 per cent down. Here’s an example of what your monthly costs could total when mortgage rates are low:

    Think about it: if your child rents a place, your money is helping the landlord pay his or her mortgage and other costs. If you buy a place instead and rent it to student, you have a real estate investment with a guaranteed tenant: your child! If the investment goes up in value, you will make money. 

There are other benefits, too. Your child won't need to look for a different place to live each year. They also won’t have to worry about subletting every summer. And their furniture won’t be coming back with them if they live at home over the summer break. Not a bad deal.

    Remember: you may not make money if you buy a student condo...But there are other reasons you may decide to go ahead. At the very least, you can provide your child with a nice place to live in a good neighborhood while they go to school.

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