My daughter is going to a post-secondary institution out of town this year. What advice do you have to help me decide whether to buy an investment property near campus for her to live in, or simply rent?
There are several considerations when deciding whether to buy or rent near campus. Whether you choose to take the investment route or opt for a student rental space, here are a few things to think about.
Consult a local expert
If you are the parent or guardian of a student who is attending college or university in a new city or town, find a knowledgeable real estate professional who has experience providing services in that local market.
While your long-time real estate representative may have served you well in your hometown where they frequently trade, they may not necessarily have sufficient knowledge about buying and selling properties in your daughter’s university or college town.
If you are buying, select a representative who is familiar with that region and can provide local insights, such as recommending contractors, lawyers, home inspectors and other service providers you may need to buy and maintain your property. These would be the same experts you would engage to help you buy a home for yourself. After all, you are making an investment and want to protect it, and yourself.
Some real estate professionals can also help you obtain tenants for the property. If that’s something you want to do, find a local representative with good knowledge of the market and municipal rules and regulations for student housing.
If your daughter ends up renting, your prospective landlord might have their own agent representing them and, while they too might be a local expert, remember it is their job to represent the landlord, not you.
Whether you are renting or buying, a local expert can provide insight into the community, including growth and development in the area, transit and traffic, shopping and recreation.
Weigh all implications
It’s important to think about all the personal and financial implications of an investment income property.
Understand the responsibilities of becoming a landlord. Are you prepared to roll up your sleeves and take on maintenance and repairs yourself from a distance, or will you enlist the services of a local contractor and property manager at an additional cost?
As an out-of-town landlord, could you be placing additional responsibilities on your daughter who now lives in your investment home along with other tenants or roommates?
Get an accountant to advise on tax implications and assess the financial benefits, including the amount of rental income you can expect.
If you are unsure about taking on these responsibilities, test the waters during the first year by renting to give yourself and your daughter time to adapt to the new surroundings.
Research local zoning requirements
Every region and municipality has its own bylaws related to residential zoning practices. Do your research.
Before investing, make sure the property is zoned for tenant housing and that all the rooms being rented conform to building and fire codes. Some municipalities may require reports on rental properties to ensure they are registered with the city.
As a tenant, know your rights. Become familiar with the Residential Tenancies Act and the jurisdiction of the Landlord and Tenant Board. Work with your real estate professional to navigate the nuances of finding quality student housing in the area.
Regardless of which option you choose, it is important that you are fully informed of the advantages and disadvantages of renting and buying in the student housing market. I wish you and your daughter all the best!
This column is for general information purposes only and is not meant as legal or professional advice on real estate transactions.Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.