After college, these young adults graduate into real estate

Parents find it makes sense to buy a home for their college kids.
MILWAUKEE JOURNAL SENTINEL
MILWAUKEE -- Remember when a minifridge was the ultimate college gift?
Today the idea of parents buying a home for their university-bound children has gone from "get real" to "get real estate," thanks to low interest rates, a booming housing market and struggling stocks.
Parents investing in real estate around campuses is a growing trend nationwide in cities with universities, real estate professionals say.
Jan Baldry, an agent with Shorewest Realtors in Brookfield, Wis., has found homes for college students "a couple of times recently."
"The last couple of years it has grown, and I'll tell you why: The interest rates are very desirable," she said. "Any time the interest rates are desirable, it makes it competitive to buy instead of rent."
Condo
Kim Erdahl and her husband, Robert, found that out when they bought a condominium in the Chicago area for their daughter, Kelsey, a junior at Roosevelt University's Chicago College of Performing Arts.
Erdahl, of Thiensville, Wis., said they first started looking for places to rent, but "the renting situation was just abysmal."
After calculating what they would pay in rent over the time Kelsey would attend school, they decided buying would be a good investment, Erdahl said.
The family bought the condominium in March 2002 for $145,000, including underground parking. They estimate the condominium is now worth about $185,000.
"Our goal is to sell the condo after Kelsey finishes college and, with the current rate of appreciation for high-rise condos along Lake Michigan, to net a return on our initial investment of at least seven and a half percent after we deduct capital gains taxes, real estate commissions and property taxes for four years," Erdahl said.
For now, the one-bedroom, 750-square-foot residence overlooking Lake Michigan provides a sound investment and peace of mind, Erdahl said.
"It had to be somewhere we felt was safe, there had to be parking, and the price was right," Erdahl said.
There are also tax benefits to buying a home, Erdahl noted.
"Kelsey does not pay rent, so we do not claim the condo as income property," Erdahl said.
But she pointed out buying a condominium is not a free ride.
"Kelsey pays the monthly maintenance fee of $300 as her contribution to her housing expense," she said, noting the family could afford to put money into the condominium because Kelsey earned a full scholarship.
Good location
If parents can afford it, investing in real estate offers several benefits, says JoAnn Vetter, an agent with Coldwell Banker Residential Brokerage in Mequon, Wis. Vetter bought a home for her son, Kyle, who attends school in Durango, Colo.
Parents "realize they can put money into real estate, that it appreciates," Vetter said.
One benefit of owning a home near campus is the money spent on the mortgage can be recouped, unlike money spent on university housing or renting an apartment.
Parents can either sell the home when the student graduates or hold onto it as a long-term investment, but "most people go into it thinking they're going to do the four years or six years that their student is around and then sell it back," said Tammy Maddente, executive vice president of Wisconsin's First Weber Group.
Using the home as a long-term investment can work in college towns because students are a renewable resource, with a fresh crop of renters arriving each school year.
But real estate, like any investment, is not a financial guarantee.
If a student drops out of school or transfers to another area, parents may be left with a second empty nest.