Defraying College Costs with Real Estate
By Elizabeth Dougherty
It's that time of year again. All
over the country, kids are packing
up their rooms and getting ready
to head off to college. While there
will be tears shed (and maybe a
little joy involved) by parents taking
their children to register for school,
financial considerations tend to weigh
on the mind. After all, universities are
expensive. Right here in Lee County,
the cost of a non-resident to attend
Auburn University is around $30,000.
About $7,500 of that is for room and
board. Is there a smarter way to spend
that $650 per month for a place to
live? Maybe.
Consider investing the $7500
per year in real estate. According to
www.bankrate.com, mortgage rates
on a five-year ARM are hovering
around 5 percent. That means for
$650 per month, you can purchase a
property up to $120,000, or so. One
of the great things about buying a
home in Lee County is the property
taxes and homeowner's insurance are
very reasonable. Your child will not
only get a place to live, but can rent
out the other room (or two) to pay for
those other expenses, not to mention
food and entertainment. All the while,
you are spending the same $650
you would have spent for room and
board, but you are getting a lot more
for your money. You are getting a
valuable piece of Alabama real estate
near a major university that will only
be in greater demand over the coming
years. But, there's more…
Do you plan on staying in the
home yourself at least 14 days per
year? If so, you can deduct your
mortgage interest as a second home.
That's an immediate benefit that could
give you more money in your pocket
at the end of the very first year. At the
very least, it's more money you can
send to Buffy while she's at school,
and it gives you good reason to come
check up on her every once in a while.
A recent www.realtor.com search
reveals 54 properties just in Auburn
that range in price up to $125,000.
There are another 28 in Opelika.
However, any local Realtor can run
a detailed list of properties for your
consideration. Keep in mind that we
are coming into the buying season,
and there may be some competition
out there between now and when
school starts. It's best to start looking
now.
Let's not forget the fact that,
when it's all said and done, you have
made an investment. On that day,
four years from now, when Buffy is at
commencement in her cap and gown,
the home might be a nice graduation
gift. Or, you may want to sell the
property and get at least a portion of
that tuition back in your bank account.
In the meantime, you defrayed the
cost of her living away from home and
maybe also got a big tax write-off in
the process. If you and your kids make
it through college, you may just want
to spend some time in Tahiti with your
profits. You've certainly earned it.
Elizabeth Dougherty, a resident of
Auburn, is a former Real Estate Broker
and Mortage Broker. She can be
reached at EADougherty1@aol.com.
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