So your student is heading to the University of Colorado – Boulder. Now comes the next decision: real estate. Where will you be housing your student during their tenure at college? One consideration is buying a student apartment instead of opting for traditional room and board on campus.
Room and board rates at the University are currently running $5,865 per semester or $11,730 for the entire year (2012-13 school year figures). Taking that into account, there’s a reason why many parents opt to purchase their student an apartment off campus for the 4 years they attend the University.
While real estate in Boulder can tend to be on the higher side in comparison to other areas of the Front Range, it’s perfectly reasonable to assume that parents would be able to locate a 1- or 2-bedroom condo for under $165,000. On a traditional mortgage with 20% down at current rates, you’d be looking at a payment of roughly $596 per month (assumes 20% downpayment and 3.55% loan rate and does not include an estimate of 1.3% in taxes and insurance per year).
In comparison with traditional room and board (and keep in mind that rates quoted above for the 2012-13 school year are for basic room and board and don’t include any extras like Residential Academic Programs), you’re looking at about $977 per year for a no-equity position once your student graduates. Assuming stable real estate values in Boulder (and they’ve historically been very stable due to growth ordinances and a zero percent vacancy rate for rentals), you’re looking at the potential for over $40,000 in equity (taking into account your 20% downpayment).
One other consideration is purchasing a two-bedroom unit and renting out the second bedroom to a fellow student. Average rent on a 2-bedroom in Boulder ranges from $1200 to $1700 per month, and with a mortgage payment under $600 per month, you could be turning a tidy profit (and have a tenant with a powerful parental cosigner on the lease to boot).
But don’t forget — you have to work boarding costs into your student real estate situation. It’s possible to purchase board plans at the University without having your student live on campus. It’s also possible to give your student a monthly allowance that’s equal to board costs so they can shop out in town and cook/eat at home. Either way, you’ll know what’s the best situation for your student. Many parents encourage their students to live on campus for the first year to build relationships and then shop for off-campus real estate for the remaining three years. Whatever your choice, Boulder’s real estate market will be ready and waiting to help you select the perfect student apartment if that’s the best solution for your situation.
If you’re wondering how your student will get around town in an off-campus residence, check out our post on student transportation in Boulder.