Ryan Cooper

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 topaying thousands of dollars toward residence fees or rent. Just look at the math: Student rent of $500 a month = $6,000 a year = $24,000 over 4 years of school. That money could go to your mortgage instead as an investment for you. In Ottawa, for example, you can buy an older one-bedroom condo for about $195,000. Or, buy a 2-bedroom for $240,000 and let your child's roommatehelp 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: Cost 1-bedroom 2-bedroom Mortgage payment $800 $1,000 Condo fees $350 $450 Property taxes, maintenance $300 $400 Total: $1,450 $1,850 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 placeinstead and rent it to them, you have a real estate investment with a guaranteed tenant: your child. If the investment goes up in value, you will make money. Just remember that those gains will be taxed. Also remember, mortgage rates and other costs change, and these changes will impact the numbers and your decision. Things to consider before you decide: You can buy the property in your name, in your child's name, or both. If you buy the property in your name, you should consider: The rental income you charge can pay a lot of your costs. Just remember you have to declare that income on your tax return. As a landlord, you can also claim many of your expenses, including mortgage interest. Assess your costs carefully before you buy. They will vary with the local real estate market, mortgage rates and other factors. Plan for some vacancies. Your child (or their roommate) may not stay in the condo over the summer break. Are you really going to ask them to pay rent if they are living somewhere else for a few months? Remember that you will own a greater share of the equity as you pay off the mortgage. And, the value of the condo may rise over time. This can offset your costs. But whether you do more than break even depends onwhat happens to housing prices in the area. 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 sublettingevery 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 neighbourhood while they go to school. Source: http://ca.finance.yahoo.com/news/Is-buying-student-condo-child-getsmarteraboutmoney-2800756642.html;_ylt=Ak.Gk2aT_bWOvnX0IMVfDRTg2ppG;_ylu=X3oDMTFkYzZwc2o2BHBvcwM0BHNlYwNuZXdzSHViQXJ0aWNsZUxpc3QEc2xrA2lzYnV5aW5nYXN0dQ--?x=0