# Buying vs Renting when daughter goes off to school



## marina628 (Dec 14, 2010)

Our 18 year old is going to Humber College North Campus in September .This is our oldest child so big step for us when she moves out.
I have looked at rent prices near the campus and to find her accommodation in a safe area we are looking at minimum of $850 but probably closer to $1000 a month.
We have been considering buying a property out in the area where she could get 2 students to move in with her and pay $600 -$700 a month all inclusive 
We already have one investment property but plan to buy another one this year regardless of what we decide with our daughter.
Would there be any tax advantage to put our daughter on the property with us?Instead of her pay $1000 a month to somebody else ,she can own 1/3 of the house and pay $300 -$400.
Her program is only three years but we would consider keeping it longer than that if we had good tenants there living with her.
We want to ensure she likes the school and area before we get tied to a property though so really confused on which steps we should take.

Marina


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## the-royal-mail (Dec 11, 2009)

Buying property for your daughter? Is this the same one who still gets an allowance from you? Or do I have you confused with someone else?

Anyway, I think this is a good time for your daughter to start living her own life, paying her own way etc. I had to start that at 17 and it wasn't easy. I saved my money from summer jobs and got (and later paid) off student loans. Student loans are a part of life for a lot of people and are a totally legitimate debt, as long as it is paid off in the end.

For lodging, the office of the college had a list of local room and board arrangements that were available to students for very economical prices. Or at least a room rental with kitchen privelege. That was an excellent way to get started. No way would my parents, or the parents or anyone I remember from college, ever consider buying a property for student short term benefit in this way, no way! College lasts 3-5 years and then you are stuck with a property and all the management hassles for many years after.

I still think this is a good time for your daughter to learn to make her own way in life. You seem too involved, and you are setting a precedent for her to be dependent on you. This is the WORST time to set such a precedent.

My opinion, which I suspect you won't appreciate, but you did ask.


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## marina628 (Dec 14, 2010)

I am buying it for myself , we have been looking to buy in Oshawa for a while as we live in Courtice and own a property there.But since daughter is moving out we are considering buying there where she will go to school ,she can live in it and get couple students.My daughter works full time and earns after taxes over $1300 a month and saving all of that money.She can contribute her fair share as property would be under $230,000.Yes she gets her $40 a week allowance and I love her but I need to worry about my retirement not hers lol

If she goes on title and bought with us she would need to get a student loan ,if we buy it and she just rents she will have the cash so no loan needed for school.


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## marina628 (Dec 14, 2010)

I appreciate it completely and here is my situation , my business is sitting on quite a bit of cash so we want to buy investment property.I am owed money from the business from my shareholder contribution so can also take this money out tax free to buy the investment.My bank talked about my daughter since she has job , will be first time buyer etc.So we could buy here and rent to strangers or my daughter and one of her friends can rent from us and get a third person to move in.I don't consider it being stuck as we are looking at condos close to humber college and it seems many people are renting them to students ,the tridel buildings also has very good condo fees and brand new.We can sell it when we are done with it or continue to rent it .


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## marina628 (Dec 14, 2010)

BTW I moved out when I was 18 got student loans too ,my husband moved out at 17 and had to get a job as he could not afford to go to school.We will be buying at least two properties in 2011 ,I do not know who will be on title yet as we have to look at tax situation ,my business is saving $20,000 + a month and sitting on $xxx,xxx cash right now .I have $xxx,xxx in shareholder loans to business that i can take out so that money can be accessible to me.

We know already SHE will rent an apartment not a room and that's why she is working for the year to afford to do this.


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## Addy (Mar 12, 2010)

We plan to buy a small two bedroom condo when our daughter is old enough (and chooses to) go to school. It's an investment for us, she will pay her share of the rent and if she wants a roommate they can pay their share of the bills as well. There are a lot of variables that could change things in the next 15 years, but for now that is our plan. I would encourage you to buy rather than have her pay rent to a stranger.


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## marina628 (Dec 14, 2010)

I know many kids that rent from their parents , it also keeps the money in the family.My uncle has three girls and when they were 16,17,18 he bought a house near the university ,moved them upstairs as they went to school and rented basement .It only took him 10 years to pay the house off ,the girls moved out and he rented rooms to other students .He still has the house and his girls are now 35,36,37 .
He has house rules ,no smoking , no pets and quiet time after 11pm .He allows them to entertain only if all the house tenants are in agreement .He was a teacher all his life so even has blackout on visitors in the house during exams .
He is so proud of the fact all his students as he calls them has completed school.I went to university so know how some are there for the parties not to learn as least in my day lol


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## Berubeland (Sep 6, 2009)

My suggestion is to buy a house not a condo. Two people I have heard of just this month have been very badly burned by buying a condo for their kid to go to school. In one they bought and the maintenance fees just went up $600 per month. Now the maintenance fees are $1100 per month. 

The other bought in a bad area, it was close to the school and lost money when they sold. 

My suggestion is to buy a property not too close to the school (you don't want it to become a drop in zone) and you don't want to buy a "student rental" because these properties sell a premium because of the cash flow they generate. You'll also want to find out what the city rules are about when a house becomes a "student rental" and aim one room below that. 

I think after you'll probably want it to become a single family home because even though student rentals make really good money they are expensive management wise and require a "presence" otherwise you risk it becoming a party house. So you'll want to make sure it cash flows as regular market rents as well. 

Next make her the "house manager" get her to rent out the rooms, collect the rents and deposit them. She will have to clean the common areas or make sure others do. For this she would get "paid rent". She'll probably learn more about people and they way they are by doing this than by going to college  

That is my suggestion. The founder of Skyline REIT started out this way he had a number of student rentals while in school.


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## marina628 (Dec 14, 2010)

700 HUMBERWOOD BLVD is the building we haved looked at and Tridal condos seem to do well in resell.The condo fees are $360 for a 2+1(den/bedroom) $235,000 or $570 CONDO fees for a 3 bedroom which is going for $325,000 now.
We would probably go for the cheaper option.
With a house there is the upkeep of land as well ,I will be honest I can't see my daughter shoveling snow or clearing the side walk and in summer cutting the grass.She is a good person to do inside work ,clean ,cook and laundry she loves doing.I can see her charging her roommates to do their laundry , make their beds and cook all the meals lol.
Normally I would never buy anything with condo fees ,I guess I could pay for snow clearing and grass cutting or find a tenant willing to do it for a cheaper rent.
So Berubeland I guess your vote would be buy a property over her renting?


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## marina628 (Dec 14, 2010)

Rachelle
I am reading your blog now , lots of great stuff.Nearly choked when i read the south Oshawa /welfare mom stories lol. You need to watch for the druggies in South Oshawa as well.My brother in law wanted me to look at a house there listed for $127,000 ,he knew no better !


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## Four Pillars (Apr 5, 2009)

I'm not a fan of buying investment property for your kids when they go away to school. The main reason is the time frame - if they are only there 3-4 years - then that represents quite a bit of risk if you decide to sell once they are finished. It's very difficult to make a profit on a property over such a short time period.

On the other hand - you are already experienced with real estate, so perhaps that changes things.

Some things to think about:

You've mentioned you are going to buy a property anyway - but if the child wasn't going to school in Oshawa - would you have considered buying a property there? Or would you rather have something closer to home?

Distance - this is related to my first point, but how far are you from the area you want to buy? This could be a problem once the child finishes school.

Commitment - Will this arrangement mean that the child has to stay in the rental during their summers too? Will this be a limiting factor for them?

Commitment part II - You mentioned this in your post - what happens if the kid wants to switch schools after one year?


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## osc (Oct 17, 2009)

I don't know if this is the best time to buy real estate. I would invest in the stock market and use a portion of the capital gains to pay the rent. I would then invest in real estate after the upcoming correction (or crash).


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## Guest (Dec 26, 2010)

Fwiw ... I've heard of parents buying a home for the use of their student kids and rent paying buddies, thus the kids lived rent free for their time at university and then the house was sold ... and I've heard of students getting together and doing the same ... worked ok when property values were increasing. 

Your question I think is can you benefit tax wise if your daughter is a 1/3 resident owner of a residence with two renters? I don't think so ... it seems to me there may be some deductions for improvements for housing students ... but at least with a partner paying 1/3 the costs you'll save about ... 1/3 the costs 

Condos ... don't get me started ... condo fees, parking space $20K, ... I'm in an area with condos pooping (oops ... popping) up all around. I'm sure those young buyers have had stars put in their eyes ... luxury living, all that money they'll make when they sell ... right ... interest rates will be up and it'll be a buyers market I'm thinking.

My 2 cents ... rather than combine the two ideas which seems to involve your daughter taking out a student loan which in the end is simply a loan (I guess to be paid out of the sale of the property down the road in that buyers market ... well, we'll see), buy where makes the best sense, and contribute to your daughters rent ... at least that $40 allowance.


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## Guest (Dec 26, 2010)

Hmmm ... there's a condo to be built across from me ... note to file ... I have a 6 car laneway ... rent 4 spaces at $100/month.


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## marina628 (Dec 14, 2010)

Four Pillars said:


> I'm not a fan of buying investment property for your kids when they go away to school. The main reason is the time frame - if they are only there 3-4 years - then that represents quite a bit of risk if you decide to sell once they are finished. It's very difficult to make a profit on a property over such a short time period.
> 
> On the other hand - you are already experienced with real estate, so perhaps that changes things.
> 
> ...


I live in Courtice , I already own one investment property in Oshawa was going to buy another.My daughter is going to move to Etobicoke which is only one hour and a bit from where we live.
If my daughter rents she will have to take a lease year round even when not in school.If we were to take a lease for the school year we are faced with storing her furniture for a few month each year and moving costs so not even worth while.

I already know my daughter will probably move back home for the summer months as she has her job secure here,but if she could get a job out in Etobicoke she would be ok to live out there when school is out.She HAS to
work when school is out and has a great job now and they are willing to let the students come back to their jobs for summer months.We don't know yet if No Frills allows transfers to other stores ,if they do then of course she can live in Etobicoke year round.She has one friend who is going to same school as her so I already do have one tenant if we buy.Having this friend who will pay rent and with us knowing the parents for many years is pulling us to buy.
But part of me is thinking maybe we should eat the rent costs for a year and see what happens.
Etobicoke is not my first choice as a rental market and No I would not buy there if my daughter is not going to school there.


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## Cal (Jun 17, 2009)

marina628 said:


> Would there be any tax advantage to put our daughter on the property with us?Instead of her pay $1000 a month to somebody else ,she can own 1/3 of the house and pay $300 -$400.
> 
> Marina


That part was a little confusing. Got it. Basically you will buy the property and subsidize her portion of the rent. It may be a good life experience to give her the responsibility of collecting the checks and ensuring she has roommates/you have tenants.

Having said that...I am not convinced this would be the greatest time to buy....

Perhaps you have other children that would like to attend college there as well in the future......


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## Berubeland (Sep 6, 2009)

I rented a suite at 700 Humberwood Blvd. The only problem with the building is the insufficiency of visitor parking especially when they have events there. You'll need to be aware that the population of that building is very ethnically diverse and you'll have to get familiar and comfortable with the way different cultures do business. There have also been issues at the building notably when I was renting there had been a shooting in the parking lot several weeks before. The previous tenant did move out due to those kinds of issues even though there is 24 hour security. 

The suite didn't take long to rent @ $1200 per month for one bedroom. That is it rented before the other tenant vacated. Despite the fact that the facilities are truly awe inspiring (used for outside weddings & events) I'm not sure I'd purchase there. I just don't like that area and it's my belief that the building will not hold it's value over time.


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## kcowan (Jul 1, 2010)

I had two boys go to college, one in London and one in Kingston. They both rented houses with their buddies. Moved out after four years without complications (i.e. no security deposits forfeited). Then they both bought houses in Toronto. Oldest son got married. Yougest son, after renting in Toronto for two years, moved one of his buddies into the house he pruchased as a renter. Then he got married.

The only help they got from us was a $5000 contribution to their purchase of a car after they graduated.

I think that the objectives in a good real estate investment cannot be achieved when an offspring is burdened with property management. They should focus on their education. If you make any money on such a transaction, it will be because a rising market floats all boats.


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## Sampson (Apr 3, 2009)

I would treat it as a pure financial decision, isn't that what you are suggestion the advantage is anyway?

Look up Berubeland's post on Cap rates, do the calculation, and if it works, buy the investment property and have your daughter take care of it for you. If it doesn't make sense as a profit generating property, then it doesn't matter whether your daughter, or your neighbor's daughter moves in, not worth while.


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## marina628 (Dec 14, 2010)

Berubeland said:


> I rented a suite at 700 Humberwood Blvd. The only problem with the building is the insufficiency of visitor parking especially when they have events there. You'll need to be aware that the population of that building is very ethnically diverse and you'll have to get familiar and comfortable with the way different cultures do business. There have also been issues at the building notably when I was renting there had been a shooting in the parking lot several weeks before. The previous tenant did move out due to those kinds of issues even though there is 24 hour security.
> 
> The suite didn't take long to rent @ $1200 per month for one bedroom. That is it rented before the other tenant vacated. Despite the fact that the facilities are truly awe inspiring (used for outside weddings & events) I'm not sure I'd purchase there. I just don't like that area and it's my belief that the building will not hold it's value over time.


This is very valuable info and part of the homework I have not done yet as we are still 6 months out from looking to buy it. I know the area and you cannot escape the ethnically diverse areas around there and personally I have no issues as majority of my friends are Asian ,Middle Eastern ,Indian,Pakistani.I lived in Brampton 16 years and the only issues we had were with WHITE Canadian born punks and go downtown Oshawa all the crackheads are white as well so call me crazy but I don't see that as a negative at all.Now the gangs and people shooting each other I do not want to get close to that.
Berubeland considering what you do for a living I will take that advise from you seriously.I spent an hour reading your blog last night and as investor found it very good advise.


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## marina628 (Dec 14, 2010)

I have to say after hearing about the shooting ,parking etc I am turned off from that area to invest there now.That is more info than I thought I would get here but having a ex tenant of the building chime in I think we will be renting for her and I will stick to my plan to buy in North Oshawa/Courtice/Bowmanville where we have lived for 10 years and know the area better.
My friend is a police officer and she looks at addresses and keeps us away from the bad ones ,most is common sense *majority of south Oshawa* but there have been a few surprises as well.


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## Berubeland (Sep 6, 2009)

I like Oshawa as an investment area very much. It finds itself in what I call a low priced "pocket" it is not far from the city yet is surrounded by higher priced areas. 

South Oshawa is to be avoided for all but the most seasoned of investors IMHO I used to manage 24 townhouses there on Porter Street and you had to pick from the best of the worse there pretty much all the time. Although at the end the status of the place had improved to the point where we didn't even have to advertise and we did have some decent people in there. It sold in March of 2010 and the new owner put it up for sale immediately. The place required very active management, you had to be there several times per week. 

I do also agree with you about problems with "canadian" people. I have evicted only one immigrant in all the people I evicted and he had been here for 20 years. Just go to the Landlord & Tenant Board and see the demographic for yourself.


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## marina628 (Dec 14, 2010)

OMG Porter Road that would be a toughie ,my cousin bought his first house in Wentworth area about 20 years ago .He drove out from west end to see house and bought it for $45,000 on spot because it was so cheap.He lived there two years then realised why it was so cheap lol.He had it sitting empty for 4 years then just sold it to get what he could for it.Another bad area is celina/court/Albert areas .My friend owns three houses on Burk Street now , picked them up for $150,000 -$190000 renovated them and rented them out .Not sure if i am comfortable with that neighborhood but they have had great luck there.I think Jarvis is another street they bought as well.


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## LondonHomes (Dec 29, 2010)

I think that the significant advantage of buying a home for your daughter is that you can ensure that she lives in a nice place and not the usual student hole in the wall. Plus having her as a renter should ensure the property it better maintained and the rent is paid.


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## marina628 (Dec 14, 2010)

Just wanted to bump thread after 8 months to tell you all we found a room for rent for our daughter for $475 a month.She is moving in with the nicest woman who does not work outside the home anymore,she is renting a room to our daughter and one more student.We found it on Kijiji and it was the first place we visited ,it is super clean and the woman seem so nice.Fingers and toes crossed that this works out for the long term for us!


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