From Dorm Room to Dream House
As college-bound students prepare for a new chapter, they are about to be faced with a multitude of decisions competing for their attention. But as they ease into their new life on campus, it's a time ripe with opportunity to lay down financial foundations that will serve them long after graduation.
Establishing excellent financial habits during college is the precursor to post-grad success. While conversations often revolve around savings and budgeting, there's one opportunity that is typically overlooked: purchasing a property in the college town. By converting the significant expense of rent during college into an investment, parents can pave the way for their child's future financial foundation. This strategic decision not only provides a tangible lesson in money management but can also become a launchpad to homeownership once they don their graduation caps.
The Advantage of Buying a Home in a College Town
Owning a home in a college town offers several benefits. The most obvious is this purchase can serve as an excellent investment opportunity. Since college towns tend to have a revolving influx of students, properties in college towns generally hold their value and appreciate over time.
In addition to having a place for the student to live while in college, theres also the opportunity to rent out extra rooms to college friends which can help cover the cost of the mortgage. On top of that, this could also familiarize students with landlord responsibilities, providing a valuable life lesson.
Finally, upon graduation, the student can sell the house and use the equity gained as a down payment for their next home. This would provide the student with a major head start in the competitive real estate market as they are entering their adulthood.
Financial Success Tips for College Students
Beyond purchasing a property, other strategies can set students up for financial success during their college years. Here’s some things for students to consider…
Credit Score Management: Learning the importance of and how to maintain a good credit score. One way to do this is by using a credit card responsibly and paying all bills on time. A good credit score will be invaluable when applying for loans or mortgages in the future.
Student Loan Management: Since a majority of students today take out student loans in order to pay for school, learning how to manage student loans well is essential. Always be sure to understand the terms of any student loans, including interest rates, grace periods, and repayment options. Students should keep track of their loan balance and make timely payments to avoid accruing unnecessary interest.
Savings and Budgeting: Even if it's a small amount, building the habit of saving money on a regular basis will be an invaluable lesson. Implementing a budget can help manage income from part-time jobs or allowances, which can help cover college expenses while still setting a little aside.
Avoiding Debt: When possible, avoid unnecessary debt. Credit cards should not be used for impulsive purchases but rather as tools for building credit history and for emergencies. Learning and practicing living within your means is a great habit to build while still in school.
We recommend chatting with a mortgage lender to understand the ins and outs of this unique investment approach, and how to get started. Remember, the goal isn't just to get through college; it's to be prepared for the financial responsibilities that come afterward. A little foresight now can lead to a robust financial future. Let's lay the groundwork today for the homeowners of tomorrow.
