6 Reasons Why Buying Off-Campus Housing Is Smarter Than Paying For Room & Board
There’s no debating that time flies. It seems like yesterday you were either in high school or college. Those who were in college 10 to 15 years ago are most likely already in the work force well into their careers. Most may have already purchased a home while others are still considering it. Whatever the case may be, believe it or not home ownership during your college career could’ve been beneficial.
As an underclassman room & board makes sense. Not only are you getting the “college experience” but as a teenager it’s import to get acclimated with your surroundings which includes school grounds and surrounding neighborhoods. However, it’s natural for upperclassmen to gravitate towards off-campus housing. Often times opting to rent with roommates to save on costs. But what if it was really cheaper to buy than to rent? What if students thought more long term goals rather than short term?
The idea seems far fetched for the average student who are often times typecast as broke and living off-of meal plans. This may be true to an extent but in actuality with the right approach, home ownership while in college could be a possibility. Here are a few reasons why you should consider it.
No ROI With Room & Board
When you look at the numbers in terms of a business standpoint, buying an off-campus home just makes sense. Room and board can run $10,000 and up for the school year. Essentially you’re paying to live in a space for about 8 months out of the year (factoring in summer break, spring break and holidays). This is equivalent to roughly a $850+ mortgage. However, dumping this kind of money into room & board towards the middle and end of your college career may not make as much sense as purchasing a home. Upon graduation you will own an asset that you can keep, sell or rent depending on your situation.
Most College Grads Tend to Stay in Philly
According to a recent study by Bizjournals.com of Philadelphia college graduates, more than 60% of regional college students stay in the area after they graduate. This ranks Philly higher than Boston’s 50% or Baltimore’s 38% college student retention rate. Considering these odds it may be wise to prepare for your future stay in Philadelphia. Home prices have only been increasing in recent years and there seems to be no sign of slowing down. Couple that with the growing interest rates, the time to buy is always now.
The Market is Strong and Continues to Grow
“Over the past four years, the median price for home sales in Philadelphia rose by 12 percent,” according the the 2015 report from The Pew Charitable Trust. In addition to the rise in prices, the volume of homes sold in Philadelphia rose 6% from 2014 not to mention Philadelphia issued the most residential building permits since 1990. For a college student with some capital, investing in Philadelphia real estate would seem like a wise investment according to these figures. Who knows what home prices and interest rates will look like 5-10 years from now. They may could likely spike, dissipating any home ownership dreams you may have after graduation.
It’s the Best Time to Build Credit
“While you can establish credit after graduating from college, it becomes more difficult. As a truly independent adult, lenders rely on your credit history to make decisions regarding your application. Without an established credit history, it becomes more difficult to qualify for credit cards or other types of loans,” according to Experien. Establishing credit before graduating college is vital. Purchasing a home with the help of parents is a great way to establish solid credit. In addition to making application processes easier, having good credit could mean the difference between you landing your choice job.
Renting Out Rooms Alleviates the Cost
Probably the biggest objective to purchasing a home while in college is affordability. With a mortgage comes utilities, maintenance, tax & insurance. For student this could feel like home ownership is out of reach. However, college students even working young professionals tend to gravitate towards having roommates. According to a recent report from home listing site Zillow, “rents hit their least affordable point in the second quarter of this year….However, the report finds that mortgages continue to be affordable for much of the population.” Therefore in many cases a mortgage payment can be lower than rent.