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Investor’s Take on Renting or Buying a Home for College Kids

Renting or Buying a Home?

Do you have a college-bound kid, and you’ve been inundated lately with college visits, tuition sticker shock, and complicated housing arrangements? While I can’t help you with that tuition sticker shock, I can give you some pointers as a real estate investor on whether you should be buying a home for your college kids or letting them stay in the dorms or apartments.

Through every stage of life, we have unique opportunities to take advantage of creative ways to build our generational wealth. Sending your kid off to college is the only one you can take advantage of today.

Let’s talk about college and your role as a parent preparing to send your kid to a four-year school. It is no secret that the price of attending college has skyrocketed! A recent Georgetown University report found that tuition, fees, room, and board costs increased 169% between 1980 and 2020. Although tuition may have remained steady, inflation has raised all the other costs of college.

Different Living Arrangements

Now, how do different living arrangements affect your spending? More importantly, how is buying a property better for you and your family? We all know that spending that money on a dorm or apartment means you will never see a dime of your investment.

As you know, we are located in the Treasure Valley of Idaho and have several local universities. There’s Boise State University (BSU) in Boise, Northwest Nazarene University (NNU) in Nampa, Idaho State University (ISU) in Meridian, and The College Of Idaho in Caldwell — to name a few.

For this blog, we will examine BSU, giving you a good idea of a public school in the Boise metro area.

Dorm Living Comparison

First, consider the pros and cons of living in college dorms for four years.


  1. They are on campus and do not need a car to get to school and back home or even to get groceries. Part of living in the dorms is purchasing a meal plan. Your kiddo can stay on the campus and most likely can do so without the added expense of having a car.
  2. It may be more secure for them, especially if the college is unsafe. Yes, those colleges do exist. Idaho’s crime rates are generally significantly lower than many other states. It’s one of the leading reasons many have moved to the Gem state. According to College Transitions, which ranked over 900 college campuses and their surrounding areas based on crime, BSU scored an overall safety rank of 102. This was way better than Ivy League school Duke University, which came in at 753.
  3. If your kid will take out loans for tuition and other fees, you can include room and board in your college financing. I don’t see any landlord financing an apartment’s rent.
  4. The room fee does include all utilities. If you live in a traditional apartment or house, your student is responsible for power, gas, internet, water, sewer, etc.


  1. You are paying for a tiny living area. A double-occupancy dorm is approximately 165 sq ft. They can hang out in other public areas, but if they want that peace, even their dorm room would not be it.
  2. Not only are meals not included in the room price, but there is nowhere for them to cook or store much food. They must buy the meal plan for an additional $5,434 (plus 6% tax) per school year.
  3. Most kids want to move out after a couple of years, but even if they didn’t, they need to clear out their rooms for summer. So, they either come home or take summer classes to be eligible to live on campus. The prices quoted on the college’s site are only for the school year.

You’re spending more money on tuition and summer school if they want to avoid moving out all their stuff at the end of the year and bringing it all back in the fall.

Looking at Dorm Pricing

All right, let’s look at some of the options at BSU. The cheapest option is Chaffee Hall, which costs $4,900 for a double-occupancy dorm room. If you want your student to have their dorm, it is $6,600. If we do some quick math, $4,900/9 months = $544/month rent. NO food is included in this calculation.

If you want a dining plan for them, which you really can’t get around if you want your kid to have any semblance of a regular meal instead of top ramen and cereal, you are adding another $5,400+ per school year.

So, if you choose the cheapest option, $4,900 x 4 years = $19,600. Unfortunately, there is no way around the meal plan, so we have to add the $5,434 per year for the dining plan for $21,736 over four years. You add those together, and that is $41,336 for room and board, hoping they graduate on time.

Now, mind you, this is $41,336 IF these prices stay the same every year and if your kid does not eat a single meal out. Neither of these scenarios is accurate nor practical.

Off-Campus Living

As I mentioned, many college students will only live in the dorms for four years, preferring to venture out to off-campus options. They may start in dorms, make friends, or get tired of the small space and move into an apartment. So, let’s look at the pros and cons of renting an apartment or shared house for your budding student.


  1. They are in a bigger space than the dorms. Now, they have a living room, kitchen, yard, patio, or balcony.
  2. They have some freedom to start flexing those adulting muscles, like paying bills, cleaning, cooking meals, and even co-existing with other people.


  1. If they look for a room to share, there is a good chance they are renting with strangers.
  2. If they are not within walking distance, they might need a car or a bike to get to school or get groceries, increasing their expenses for a car, insurance, gas, maintenance, parking, etc. Of course, if you opted for walking to school or biking, there is some concern about the weather in Boise, Idaho. We do get snow and nasty cold weather from time to time.
  3. Most options close to the school will be more expensive. It’s cheaper to rent the further you go. This, of course, increases your costs either way. If you opt to stay close, you can pay more to forgo the car or go further out and have to provide another means of transportation for your student to be at school on time and get food.
  4. As the one with a credit score and a job, you will likely need to co-sign on the lease and all utilities. You might be willing to do that for your kid, but if they are renting with other students, do you want to assume any responsibility for those guys? Even if other parents co-sign, there are always those situations when it is hard to ascertain who is at fault and, thus, who is responsible. Those situations can get pretty nasty; if you aren’t the one calling the shots, you will be at the mercy of others.
  5. You must pay the whole year since most leases are written for at least a year. Shorter leases are available, but they are usually more expensive. If you had planned on bringing your kid home for summer, they might still need to pay the rent and utilities through those summer months.

Off-Campus Pricing

A quick look at Zillow can show you what you might be responsible for if your student decides to live off-campus and either rents an apartment or shares housing with others.

Renting a Room

First, let’s consider renting a room. If we search here, we can see that, on average, you would pay about $625-$850/room to rent a room.

Apartment Rentals

If you want to spring for them having their apartment, they can get into one for about $850 for a studio.

Share a House

If they made friends at school and wanted to rent a house together, they are looking at about $2,000 for the cheapest 3/2 house. If they had their room and shared the house with three others, you get $2,000/3 = $667 per person. Then, you must calculate other expenses like utilities, food, and other house maintenance.

Again, the cheapest option of renting a room for about $625 a year is about $7,500, not including food, utilities, and any transportation they might need if they are far from the school or grocery stores. Suppose you had to provide them with a car, and pay for gas, insurance, maintenance, and give them an allowance for groceries or eating out to make sure they don’t starve and pay a portion of the utilities (power, gas, water, internet) so they don’t get evicted and don’t ruin your credit. In that case, you are looking at another approximately $990 monthly.

Here is a quick breakdown:

Shared expenses on average:

  • Power bill: $80
  • Gas bill: $50
  • Water/sewer/trash: $50
  • Internet: $80
  • Total: $260 per month divided by 3 people = $86.67 per month ($90)

For your student:

  • Groceries: $400
  • Eating out: $200
  • Car gas & insurance: $200
  • Miscellaneous: $100
  • Total: $900 per month

Multiplying these expenses by 12 costs you another $11,880 for the year. If you add that to the rent, you have $19,380 for that year. And if you multiply that by four years of school, that’s $77,520!

You Become the Landlord

Keeping your kid housed will run you some serious money over four years. Ultimately, if you do it in one of the above mentioned ways, you will have nothing to show. There is a better way.

Depending on your unique financial situation, you may be able to find a way to purchase a property that will not only house your student for the next four years but also give you a slew of other advantages like income tax deductions, property appreciation, and passive income.

To best demonstrate that, let me tell you a story of a hardworking mom who did just that for her daughter. Your brain might short-circuit when I give you some of these numbers, but stay with me. Prices have increased, and I will make a strong case later for why they will continue to go up shortly.

In 1996, this college-bound student found her first apartment to rent. It was a run-down 1 BDRM sandwiched between two fraternities on a busy street. There were no parking or laundry facilities in the unit or on the complex grounds (another expense to account for). The rent for this unit was $400/month. If this young girl had stayed in that apartment for all four years with NO increase in rent, her total rent would have been $19,200.

Now, this girl’s smart mom started looking for other options to offer her daughter better security and more amenities. She was rewarded with a two-bedroom, two-bath townhouse with laundry in the unit. This townhouse was in a gated community of older, working residents, with private assigned parking, a community clubhouse, a pool, and most importantly, still within walking distance to the school. Purchase price? $36,000. Now, she was fortunate enough to have the cash to buy it outright. But even if she financed this property with 20% down ($7,200) at the average 7.81% interest for 1996, the monthly principal and interest payment would only be $207.52.

Some quick research showed that this 2-bedroom townhouse could be rented for about $650 monthly. Split between two people, her daughter would be paying about $325/month if she got a roommate.

And if she looked at the investment side of it, she thought she could rent the unit for $650, assuming a 2% rent increase yearly and an average 5% vacancy rate, the numbers would look like this:

  • Year 1: $650×12 = $7,800 – 5% vacancy = $7,410 rental income
  • Year 2: $663×12 = $7,956 – 5% vacancy = $7,558 rental income
  • Year 3: $676×12 = $8,112 – 5% vacancy = $7,706 rental income
  • Year 4: $690×12 = $8,280 – 5% vacancy = $7,866 rental income

Total income over 4 years = $30,540

So, yes, the daughter would be paying half the rent. But did you know that you can use your tax-deferred 529 college savings plan to pay for your student’s housing? It’s true. Check with your financial planner and CPA to see how that would work.

Now, here is what actually happened with this mom and daughter, which if you haven’t guessed, is my mom and I. I lived by myself the first year. Since my mom bought the property with cash, my only expense was the HOA monthly fee of $150 plus my utilities, food, and car, since I drove home on the weekends.

The following year, my cousin Liz came to live with me. My costs decreased since I had someone to share the housing expenses, and we carpooled home. The following year, my other cousin Susy came to live with us. And in my fourth year, my sister moved in.

In 2001, my mom sold that townhouse for $49,500, realizing a 37.5% increase in appreciation over those five years, an average of over 7% per year.

Not bad, right? In this case, it was more important for my mom that I have somewhere safe to live. And that may be the same for you. But you can also look at this from the investment side.

Buying a Home

If you want to spring for them having their apartment, they can get into one for about $850 for a studio.


  1. Investment Growth: You invest your money in a hard asset that has shown a proven appreciation of an average of 4% per year over the last 20 years. In my example, it went up almost 8%. We have seen unbelievable appreciation in the Treasure Valley in the past ten years.
  2. Control: You control the housing environment and area that your kid lives in. You call the shots and make the critical decisions because you are the owner.
  3. Long-Term Use: If you have more than one student attending that college, they can also take advantage of that housing situation. Your initial investment is set to one time.
  4. Capital Gain: You can sell your hard asset and most likely sell it at a higher price, capitalizing on the rent you didn’t pay to someone else and on your initial investment.
  5. Rental Income: You can keep the house and rent it out, either long-term or short-term, as an Airbnb for parents visiting their kids.
  6. Tax Benefits: You can depreciate yearly expenses and claim income tax deductions on repairs, rent losses, property damage, and capital expenditures.


  1. Property Damage: You may have a kid who trashes your place with their friends. Can it happen? Sure. If this is the case, you might want that degree of separation a good property manager can provide.
  2. High Turnover: There is a higher turnover if you rent to students. As mentioned, some kids go home for summer, and the college rental market is seasonal. However, once your kids have graduated, consider renting it to the non-student population or even turning it into an Airbnb.
  3. Vacancy Rates: The slower summer months, when kids go home, can lead to a higher vacancy rate. Some kids or parents will want to avoid signing a 12-month lease.

As with any real estate investment, we want to know that if we spend money on something, we will see a return on our investment. If you would like to know what buying a house near BSU would be like, please contact our team for a personal consultation.

Housing Market Stats in the Treasure Valley

Instead, we will look at two measures of appreciation: sales price and rents.

Your average home price in southeast Boise is about $561,000 for an 1800 sqft house in one of the best areas of town. Over the last few years, this area has seen immense appreciation. Despite the severe increase in interest rates sabotaging much of our real estate market, this area has started the rebound with a 2.2% increase already in three months, well on its way to making up for the 3.7% loss last year.

Because of BSU’s proximity to downtown and the river, all the surrounding areas’ real estate has been insulated from any appreciation losses. If you want to learn more about capitalizing on a good school, please check out my blog about schools and their importance to investors, where I discuss this in more detail.

If you plan on using this property as an investment, then rent appreciation is also something you should pay attention to. Like sales prices, rents are subject to supply and demand. From 2017 to 2020, rents in Boise went up 19%. In 2021 alone, they went up over 27%!

Rents have leveled off right now, and with the surge of new apartments in the area, we have seen an increase in move-in concessions and other perks. More supply means less rent growth.

However, remember that the apartments we saw came onto the market last year and were built after some time. That process started at least three years ago, if not more, when interest rates were much lower. As interest rates have skyrocketed, those construction loans, which are not on fixed rates, have stalled many new projects that would be delivering more supply in the next few years.

There are a myriad of sources, all with different numbers, that agree that the US is millions of units short. Unfortunately, Boise is not immune to that conundrum. When there is a lack of supply, prices always increase. Rents will move up in the next few years.

When we consider demand, we also need to consider who your primary renter will be. We assume it will be your child, but that might be short-term, just while they attend school. If you kept that house for longer, consider other tenants who aren’t students or professors and a short-term Airbnb option if you wanted to rent by the night to parents coming in to catch a college game or see their kid graduate.

How You Purchase Matters

How you purchase the property also matters. There are several ways to do this, each with its own unique advantages.

Parents Buy a House as an Investment

First, you can finance it as a straight investment vehicle. You rent it out to students, including your kid. As mentioned earlier, you can use any money you save to pay for your kid’s portion of the rent. Please check with your CPA to see how that would affect you personally. Everyone’s financial situation is different.

You can take advantage of all the perks of owning real estate, including depreciation, deductions for repairs and maintenance, rental losses, and so forth. I have shown you how your property will appreciate over time, allowing you to get a good return on your investment over the long term. As housing remains scarce, rents will continue upwards, ensuring a good return in the short term.

Of course, if you have the means, good old cash works wonderfully! As is expected, buying the property outright gives you a few other advantages in Idaho. Since there is no loan to contend with, you can add your kid to the title and have them take advantage of the state’s homeowner’s exemption available to owner-occupants, thus saving you money on your property tax bill.


Student Buys as Owner Occupied and House Hacks

For a lucky few, a couple of advantages to your student being on the loan exist. If you have a student with a proper credit score or even non-traditional credit (three accounts needed: cellphone bill, utility bill, gas card, with six months’ history), and possibly a part-time job, they might qualify for a mortgage with you as a co-signer.

This gives you two options. The first is coming in with a lower down payment. Instead of 20%-25%, you can come in with as little as 3.5% down. I cover this in detail in my blog on how to buy a fourplex with as little as 3.5% down.

If you can count on more cash reserves, assumable loans might be an option. Because of the recent historically low interest rates, many of these loans can be assumed by an owner-occupied buyer with a rate as low as 2%. Usually, there is a big gap between what is owed and the price, which accounts for the hefty down payment requirement. A conversation with a suitable lender would give you all the details for this type of loan.

Wrapping Up

Even though we know that many more costs are associated with living in the dorms or living off-campus, I want to focus on just the housing portion. We looked at BSU dorms. You will spend at least $19,000 for the dorm over four years.

If you had them rent the cheapest room available today, you would spend just under $35,000 in four years. In both cases, you are giving that money to someone else and dealing with all the problems associated with living arrangements over which you have minimal control and zero return.

On the opposite side of the spectrum, you and your kid might be lucky to invest as little as 3.5% and reap the benefits of homeownership while taking advantage of real estate investment perks like appreciation.

Of course, there are inherent risks anytime you invest in anything, and real estate is not immune. However, in the scenarios above, one sure thing will happen: housing will go up in whatever form you seek. It is simple supply and demand. People need somewhere to live. And now, there needs to be more places for them to live.

So, as you consider your options, your situation could be perfect for buying a home for your student to live in while they get their degree away from home. If you need more guidance on this matter, please feel free to contact us today. Our team would be happy to meet with you and show you some creative ways to look at real estate investing.

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