When buying your kid a house is cheaper than paying for a dorm

Personal Finance

Such parental purchases are common in the Philadelphia area, said Heather Petrone-Shook, president of the Greater Philadelphia Association of Realtors. Typically, parents purchase the property themselves and take on additional renters. In other cases, she said, the child buys the property and the parents supply a loan in lieu of a mortgage.

“Instead of paying ABC bank, they’re paying the bank of parental units,” Petrone-Shook said.

Parents who buy a property as a gift for a child may need to file a gift tax return, Eisenberg said. A married couple may give a child up to $28,000 in 2017 without filing a gift tax return.

Parents who are likely to sell in four years when their child graduates should focus on selecting a property that will be easy to resell, said Wendy Flynn, a real estate agent in College Station. She advises parents to select a modest property in a convenient location.

“Don’t buy the most luxurious property, and don’t buy a foreclosure,” Flynn said.

The annual influx of new students in a college town provides a steady stream of buyers, Flynn said, so it’s typically easy to sell. Most parents break even or turn a modest profit when they sell, after accounting for closing costs and other expenses, she said.

Brian Chubb said he generally breaks even on a month-to-month basis on the family’s property, which his sons dubbed “the Bro House.” And owning has brought other perks. His older sons enjoyed living together for a year, for example. And although renting to college kids might terrify some property owners, he doesn’t worry about his investment getting wrecked.

“They’re laid back guys, and they’re good students,” he said. “They’re not throwing keg parties every weekend.”

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