August 28, 2006
Posted by Sam Jackson
Room & Board up 5 percent; Forbes says: Buy real estate
You saw the headline. Room & Board up 5 percent, Forbes Magazine says 'Buy real estate'. What? That's right.
"Investing in your child's education as well as your real estate portfolio can really pay off." Anyone else find this article a little bit perverse?
For students, the mention of college conjures images of sprawling quads, crowded libraries and all-night parties. But for their parents, what comes to mind is likely a laundry list of expenses.
The good news is, college doesn't need to be so hard on the wallet--at least when it comes to housing, an area that becomes more absurdly expensive with each passing year.
Total room-and-board expenses at private undergraduate colleges averaged $7,791 during the 2005-2006 school year, up 5% from the previous academic year, according to The College Board's annual report on college pricing trends. But consider the alternative: investing in real estate. If done wisely, this nontraditional approach could not only save you the cost of college housing, it might even help you turn a profit.
Rather than shell out a small fortune for a ratty dorm room or an overpriced apartment, parents can build equity, generate cash flow and eventually benefit from real estate appreciation--assuming they are willing to be landlords and invest some cash up front.
"It's a real win-win situation for people who have liquid assets," says Jay McHugh, a broker/owner at RE/MAX International in Brookline, Mass. "Instead of paying Boston College or Harvard University $40,000-plus per year, and seeing $12,000 to $15,000 of room and board go out the window, you can easily pay $300,000 for a two-bedroom condo in the Alston-Brighton area."
Here's the key phrase: "It's a real win-win situation for people who have liquid assets."
This is a roundabout way of demonstrating that the rising cost of education is paralled by socioeconomic disparity among the college-bound... Being upper-middle-class, I'll get the short end of the finanical aid stick. Too bad I can't buy a townhouse to live in and rent out... good idea though, Forbes.
I'm currently a rising senior at Yale University and I've been blogging about college admissions and higher education marketing trends since I began my college application process in 2005. I now also write about my experience here at Yale.
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