Home Buying in Austin>Question Details

Barb T, Home Buyer in Houston, TX

My son is a Junior at the Univ. of Texas. Would it be better for him to rent and apartment or buy a condo as an investment.?

Asked by Barb T, Houston, TX Wed Jun 29, 2011

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27
I've worked as a leasing/sales agent in the campus area since '05. How the market has changed. To answer your question, really depends on how long you intend to hold the property. Seeing as how your son is a Junior, I would assume he'd live in the property for the next 2 years, par from graduate school, etc... If you intend to sell the property after his Senior graduation, I would lease. If you don't mind holding the property as an investment over a 5-7 year span, then purchase. You will have no issues leasing the property to students. None. But you need to buy what you know is in high demand. And buy it at the right price so that market leasing values cover your monthly debt services. *Make sure you are aware fo what a potential property can lease for!*

As for finding "deals" in the campus area, sure! They exist. Though, in limited quantity. It's not like the good ol' days where everything you were looking at was a phenomenal opportunity. It now takes a more narrowly focused consideration. Regardless, the #'s tell the truth. So an updated CMA can provide you with the majority of what you need to know to make an educated purchase, and protect your investment.

If you're looking at purchasing in the campus area, don't get overwhelmed by the amenities. i.e. - granite, stainless, pools, gyms, hardwoods, etc... It's not a need, though students claim them as such. They are easily updated prior to move-in/resale. 2-bed/2-bath condos are a dime-a-dozen for good reason . . . easiest to lease. Stay away from studio/1-bed units as an investment. A 3-bed is also a nice choice (because of their limited quantity), if your son will have roommates (let them pay the majority of your mortgage)!

Really it all comes down to your budget, your intentions. Simple answer: Hold longer than his remaining 2-year stay @ UT? Purchase. Sell after he graduates in just 2 years? Lease. Take a look at the site I've shared below. Will provide a better understanding of the potential.

Aaron Marcus
Austin City Living/West Campus Living
Realtor®
512-696-0490
aaron@austincityliving.com
1 vote Thank Flag Link Wed Jun 29, 2011
Barb T

Rent. There is a great likelihood he will be moving from Austin, or at least away from U.T. in 2 years. If he has to get out of the condo in two years he will need it to appreciate about 10% to cover fees to sell it. I would not recommend this type of "investment" at this age. His life will change a great deal in the next 3-5 years. If you are thinking cash, this cash may be needed for other things in the very near future. If he finances this may hurt him in the future with trying to buy a house. Investing in Real Estate can be fun and profitable, but it can also be inconvenient and a loss of money. Graduating in 2 years he will have a lot of doors opening for him, better not to close any now. If he is better than 70% certain he will be staying in Austin post graduation then buying is a great idea. If it were you who were making the investment I would have much different advice. When you are established and ready Real Estate can be a great investment. Austin rents are going up so now "could" be a great time to buy.
0 votes Thank Flag Link Tue Jul 26, 2011
With your son having only 2 years remaining at UT, I think you would have to be very selective in the condo you buy. Also be sure and consider the transaction costs for buying, then, selling and factor this into your decision. Also consider the costs of wear and tear on the property. Not knowing some of the details of your plan and your goals, it's hard to say a definate yes or no, but overall I would say to select your Realtor and your property very wisely!

Sondra Apelt
Texas Open Door Realty
512.600.7078
0 votes Thank Flag Link Tue Jul 19, 2011
I have a gorgeous classic campus condo for sale right now that's only 4 blocks to the UT campus. Its a small complex with 12 units that have been completely redone from the studs up. It has real hardwood floors, solid granite countertops, and reserved covered parking. Its a two bedroom one bath condo listed for sale for only $229k. The seller bought it four years ago for his son to attend UT.
0 votes Thank Flag Link Sun Jul 17, 2011
There is a great invest property that is a duplex approx 3-4 blocks from UT it is a cash only deal. However a great way to have your son a place to live and you collect rent on a property as well. If you are interested call me for the details to be emailed. 512-750-5716 or vanessanunez.realtor@gmail.com

Warmest Regards,

Vanessa Nunez
VOX Real Estate, LLC
http://www.escapesomewhere.com
0 votes Thank Flag Link Sun Jul 17, 2011
Hi,
I have a house for sale on East 32nd St. which is walking distance to UT. Here is a link to it.

http://austin.cbunited.com/property/property.asp?PRM_MLSNumb…

I think a house is better than a condo for resale and because of the HOA fees with a condo. Let me know if you are interested and I will give all the details.
Thanks,
Linda KIng
512-576-0901
Coldwell Banker United Realtors
0 votes Thank Flag Link Sun Jul 17, 2011
As a junior with only two years remaining before leaving Austin it would be more prudent to lease a property rather than purchasing. With Austin's job growth, about 2% this year, people are moving to Austin. 6000 are expected to move to Austin during this summer of 2011. Combined with attractive financing rates it's true it's better to purchase than rent however with only a two year timetable you would not recover your costs of purchasing and selling. A rental on the UT shuttle route or in the campus area would be convenient however there are several other alternatives like a house or condominium within a 20 minute or so drive. A fairly inexpensive house would be in the $1000 to $1200 per month range.
0 votes Thank Flag Link Thu Jul 7, 2011
Yes, this true. You can make a good profit. Eventually most UT grads want a place in Hyde park after they graduate. I would suggest that area. Do not be sticker shocked the housing prices command a premium but worth it.
0 votes Thank Flag Link Thu Jul 7, 2011
Buy the Condo, or better a house close to campus, you can get others to rent this home too, and this could be profitable for you! Lets say your Son and two others decide to live here, so you get $600 from each of the two that rent, $1200 per month, you make your son Building Manager, and pay them a salary , this becomes a deduction as well as the other expenses to this house and you will be able to deduct all the profit and claim even loses for other tax credits! Ask a good accountant about it, their eyes will light up at the prospect and you will actually help your son and be able to almost deduct what you help pay him in tuition and living expenses!
0 votes Thank Flag Link Thu Jul 7, 2011
People are in the same situation near the Fresno State campus:

I would say definitely, YES.

1.) The market is so far down, you should be able to find a great deal
2.) You've got two years for something to happen
3.) I would recommend looking at houses over condo's
4.) He could rent out the extra bedrooms for cash flow.

Good luck and may God bless
0 votes Thank Flag Link Thu Jul 7, 2011
This is a tricky question. It truly depends on your criteria for both investing and the need for your sons living arrangements.
0 votes Thank Flag Link Mon Jul 4, 2011
Barb T,

there are truly too many unknowns in your question to provide a truthful answer, but I would say that limiting yourself only to condos could be a mistake. As a broker and investor I would challenge you to consider all options (single family, condos, duplexes, etc).. Not knowing your long-term goals and your preferred exit strategy makes this difficult to answer.

Guy E. Gimenez ABR, CRS, GRI
Broker / Owner / Investor
The PowerHouse Group
511-731-5613
guy@phgbrokers.com
Web Reference: http://www.phgbrokers.com
0 votes Thank Flag Link Wed Jun 29, 2011
Barb, I did not read all the answers, but I read a few and it can be a bit confusing. To answer your question properly, I would need more info., such as if your son was planning on staying in Austin after graduating, job and credit situations, if you are prepared to be a landlord after he possibly moves on, etc. etc. I do help parents like you often and would be glad to talk with you to get some more answers and give you an informed opinion. Please feel free to click on my name to the right, review my Credentials and Client Testimonials, and contact me if you'd like. I am a top producer and Master Instructor with Austin's #1 Real Esate Co., Keller Williams Realty, Ranked #1 by Buyers 3 Years in a Row (JD Power & Assoc.) and do NOT charge for you for my services as a Buyer, etc. Sincerely, Joe Jarusinsky, REALTOR/Master Instructor, Keller Williams Realty (512)-261-4415
0 votes Thank Flag Link Wed Jun 29, 2011
Barb T,

Good day to you. It really is this simple and really does boil down to this premise:

You can buy and invest and build wealth for yourself and/or your son or you can rent and continue to build the wealth of someone else. This basic finance principle does not change.

If you have additional questions or need professional assistance please do not hesitate to contact me.

Sincerely,
Stephen B. McClain, Broker Owner
Cornerstone New Home Solutions
http://www.CornerstoneNewHomeSolutions.com
512 876-3116
0 votes Thank Flag Link Wed Jun 29, 2011
Barb:

Buying is a good deal for your son. The only problem will be is that since he is a student w/o income you will need to take out the loan in your name. He can be on the title. I have done loans on students and have found that a 5yr or 7 yr adustiblle rate loan is good for my clients. The rates are lower than the fixed 30 yr. loan. The rates or fixed for 5/7 years. That way you can either sell it when he graduates or refinance it into a 30 yrs. Most out of town people perfer to sell it. Just be careful on buying a condo that is not warrantable they present more problems on getting a loan. Also when comparing condos pay attention to the homeowner fees.
Good Luck,
Tim Hunke
Web Reference: http://www.TimHunke.com
0 votes Thank Flag Link Wed Jun 29, 2011
You can tell this maret has historically appreciated by looking at the past comps. For example five years ago the average price per square foot for a condo or 1/2 duplex was $150-190. now they are in the $210-$250per square foot range. So if history is any indicator, this area is a consistantly a good buy.

Sincerely,
Betina

Austin Home Girls Realty
1601 W. 6th Street
Austin, TX 78703
(512)771-6318
0 votes Thank Flag Link Wed Jun 29, 2011
Hi Barb, One thing to consider is the HOA fees as well as future assessment fees. Be happy to work for you and send you listings.
0 votes Thank Flag Link Wed Jun 29, 2011
Oh if hind sight were 20/20....and he had purchased as a freshman it would have been a "nobrainer." Depending on the deal your son can get and his future intentions, buying may still be a viable consideration.

Best wishes,

Bill
0 votes Thank Flag Link Wed Jun 29, 2011
Hi Barb T,

Here is what I typically share with clients that are considering renting vs. owning.

http://mcedge.tv/16a5d9

Would you'll be OK with being a non-occupant co-borrower should your son not be able to qualify for the loan on his own merits?

Hope this helps.
0 votes Thank Flag Link Wed Jun 29, 2011
Dear Barb,
It is almost allways better to buy than to rent. The UT area has been consistantly hot and prices continue to rise even in this challenging economy. If your son plans to remain in Austin after graduation I would say definately do it. Otherwise it is a fantastic area to own rental property as there is always a new crop of renters each year.

The condos in this area can vary a lot in style and amenities. Right now I have a lovely 1940's condo that has been beautifully updated completely from the studs up, listed for sale for only $235K. It is not typical as its in a small property with only 16 units and has dedicated coveredparking. Many of the new condos are in huge complexes with hundreds of units.

If you would like to see some comparable properties just let me know, I am happy to help.

Sincerely,
Betina
Betina Foreman- Realtor
Austin Home Girls Realty
0 votes Thank Flag Link Wed Jun 29, 2011
Barb if you buy the house, you can rent it to him and a few others so you can make a few dollars, if you make your son the superintendent of you property, you can pay him for the service, which means that you can give him the cost of tuition, which is then deductible for you as it is a business expense! When your son leaves the college, you can still rent out to college students and make some good money, you can sell a proven investment or you can transfer it over as an income for you son!
0 votes Thank Flag Link Wed Jun 29, 2011
I agree 100% that buying for the long term is the better option if it is within your budget, and a budget is key. Be sure to sit with your agent and calculate expected fees and potential tax ramifications. Then select a property management that you trust - you absolutely need one - and ensure you know what their responsibilities, your responsibilities and the tenants' responsibilities are. Don't wait until you buy a property to get surprised by any of this.

As is everyone else who answers this question, I am available for further discussion and would be happy to assist you.

Peace in your home,

Doug Vogelsass
512-739-0457
0 votes Thank Flag Link Wed Jun 29, 2011
If your son was buying a condo as a freshman I would say absolutely purchase a condo! To make a the decision now, I would need some additional information. Part of the equation is related to if he is planning to have a room mate pay rent? Another question would be what is your son allocating to rent currently?

With these and a handful of other questions, we would then compare the purchase vs. rent issue more formally. I like the idea of an investment in real estate, but it might be premature.

I am happy to sit down and do specific calculations, anytime.

Robert H. Nelson
Broker and Owner
The Associates Austin
512.517.4432
robert@highway290west.com
0 votes Thank Flag Link Wed Jun 29, 2011
The condo market is flooded with listings, depending on size and area, they can start at 30,000 and go up depending on size and area. Many of these condos are on the shuttle routes for UT. Here is a one minute newsletter about the market I believe you will find interesting. http://lisasalinasgruver.housingtrendsenewsletter.com/
0 votes Thank Flag Link Wed Jun 29, 2011
There are still plenty of kiddy condos available right now but as you may imagine, coming July they fly. If you are buying to keep more than 2 years, your investment should be safe. Choose wisely though (check on special assesments, condition, etc.)
Web Reference: http://www.myclients1st.com
0 votes Thank Flag Link Wed Jun 29, 2011
If your son can afford it I think investing in a property is the best way to go. He'd never lack in tenants in the area if he decided to move away at some point. That said, going into this investment thinking of it as a flip potential wouldn't be a good idea although it could be a possibility.

There are so many options out there but as an investor purchasing a property I wouldn't commit to just condo's. Homes are a great option as well and just as easy if not easier to sell in the long run.

If you have any other specific questions I'd be happy to answer them. Feel free to get in touch at any time. I personally own some rental properties and have also flipped homes. I have many contacts in the construction industry as well.

Lee Ann Seitsinger - 512-762-7969
0 votes Thank Flag Link Wed Jun 29, 2011
By far a purchase would be the prudent decision. Interest rates are low, prices are low - a rare combination. I know condo market very well in Austin. Email me at holby100@gmail.com if you need my assistance.
0 votes Thank Flag Link Wed Jun 29, 2011
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