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Dorm Life vs. Ownership

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At the risk of revealing the true depths of my ignorance — seeing as how my son is some 15 years away from having to worry about college — I couldn’t help but think about this post on Zillow’s blog:

While the potential gains are tantalizing, there are some major red flags and risks involved with financing your child’s private study environment/animal house. To further tap into this concept, I read up on the Zillow blog about buying a house for college and raised this question on Zillow Discussions yesterday. “Mom & Dad: Should I live in the dorms or will you buy me a house?” Four hours and 45 comments later, I had my answer—-or at least a lot of new opinions.

Do go check out the comments.  Most of them tend to emphasize the idea that 18-year olds are simply not responsible enough to be homeowners.

The author concludes, therefore, that dorm life is the answer:

My advice: Parents, make your kids live in the dorms. Dorm life builds character, strengthens your immune system, and is the heart of undergraduate college experience. Parents, college is your time to relax and enjoy an empty nest. Don’t stress yourself out by micromanaging your child’s college experience.

There are two questions that come to mind.

1.  Is there some magical responsibility transformation that happens between the age of 18 and 22?

Because the exact same analysis — whether to buy a house for your college student child or to have them live in a dorm — applies to whether you should help your new college graduate buy a place or to have them live in an apartment.

My family was not in a financial position where this was ever an issue, but if it were, I’m not sure that I was somehow far more mature at 22 than I was at 18.

In fact, in retrospect, I think in many ways I was more mature as a sophomore in college than I was my first year on Wall Street: I had less money, fewer distractions, and more homework.

Meanwhile, my wife owned her own little studio condo within 18 months of graduating from college, and her parents helped her with the downpayment.  As a 22 year old assistant buyer, making roughly $19K a year, she managed to make mortgage payments every month, determined not to ask Mom and Dad for money for her house.  She told me stories about eating nothing but bologna sandwiches for seven months straight, just so she could make the house payments and repay her folks for their down payment loan.  Knowing her as I do, I’m not convinced that she couldn’t have done the same as an 18 year old.

I suppose every parent knows their own child, and can make the decision whether he/she is mature enough to handle the responsibility of homeownership.  But that leads to…

2.  If your child is not mature enough to handle homeownership by 18, is she truly ready to be leaving your roof in the first place?

This may take the discussion a bit away from what I usually talk about on this blog.  But it is a real question.  College isn’t kindergarten; it isn’t sleepaway camp.  One gets exposed to all sorts of things that require judgment and responsibility to handle — alcohol, sex, drugs, even violence, not to mention the actual course of study, and so on.

It seems odd to me to claim that a student isn’t mature enough to make payments, maintain the property, and so on, but is mature enough to make decisions about sexual partners, choice of career, and whether and how much to drink.

Are we, as a society, holding our young people to too low a standard?

-rsh

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Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called “a revolutionary in a really nice suit”, people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

10 COMMENTS

  1. The College years are a combination of increasing responsibility and testing limits.
    Putting aside legal ages for marriage, draft status, driving, drinking, each individual is different
    Some 21 year olds drink responsibly while there are 40 year old lushes.
    Ditto for 21 year olds for fiscal responsibility vs. 40 year old bankrupts.
    With all the limit testing that college age kids are going through, they probably don’t need homeownership thrown on top of their responsibilities.

  2. The College years are a combination of increasing responsibility and testing limits.
    Putting aside legal ages for marriage, draft status, driving, drinking, each individual is different
    Some 21 year olds drink responsibly while there are 40 year old lushes.
    Ditto for 21 year olds for fiscal responsibility vs. 40 year old bankrupts.
    With all the limit testing that college age kids are going through, they probably don’t need homeownership thrown on top of their responsibilities.

  3. I’ll go read that article, but since I found this one first, I’ll contribute my own experience with college kids as homeowner here first :

    I’m the parent of a daughter who became the owner of a house, 2 blocks from her college, at the age of one month-short-of-her-20th birthday. She had experienced living in the dorm, followed by a year in an apartment, where the apartment management severely “cramped their styles” by calling it off-limits to drink beer by the pool after 10pm!

    After looking at rental homes in the area, we determined that for the same monthly cost as renting for the 5 roommates, we could buy a house (with 3% down) and pay the mortgage, taxes, insurance, gardener, and home warranty (that would fix the broken items that the college kids would probably wreck.) We used an FHA loan with daughter and roommate as the primary borrowers, and the 2 sets of parents as co-signers.

    They had loud parties, the cops came and threatened to fine them, they had roommates move out, and new incompatible ones move in, but someone always paid the rent, which paid the mortgage.

    My daughter was the “property manager” and collected the rent from the roommates, called the home warranty company to fix things, signed the leases, as landlord, when new roommates moved in, coordinated the damage deposits at move-in and inspections and deposit returns at move-out.

    We all learned that kids who go from “Mom & Dad – to dorm – to house” don’t realize that light bulbs and toilet paper don’t just grow in the cabinet, and someone needs to call the utility company to put the billing in someone’s name, or the water doesn’t run and the lights won’t turn on!

    Over all, if the numbers work (rent vs buy) it can be a terrific experience for both the student and the parents to invest in a college house. After owning our college house for 8 years, (daughter was in it for the first 2, and roommate’s younger siblings for the next 2, then strangers for the next 4 years) we sold it at a substantial profit, paid off her student loans, paid for her wedding, and put a pretty good chunk in the bank!

    I would do it again, if I had another kid starting college now!

  4. I’ll go read that article, but since I found this one first, I’ll contribute my own experience with college kids as homeowner here first :

    I’m the parent of a daughter who became the owner of a house, 2 blocks from her college, at the age of one month-short-of-her-20th birthday. She had experienced living in the dorm, followed by a year in an apartment, where the apartment management severely “cramped their styles” by calling it off-limits to drink beer by the pool after 10pm!

    After looking at rental homes in the area, we determined that for the same monthly cost as renting for the 5 roommates, we could buy a house (with 3% down) and pay the mortgage, taxes, insurance, gardener, and home warranty (that would fix the broken items that the college kids would probably wreck.) We used an FHA loan with daughter and roommate as the primary borrowers, and the 2 sets of parents as co-signers.

    They had loud parties, the cops came and threatened to fine them, they had roommates move out, and new incompatible ones move in, but someone always paid the rent, which paid the mortgage.

    My daughter was the “property manager” and collected the rent from the roommates, called the home warranty company to fix things, signed the leases, as landlord, when new roommates moved in, coordinated the damage deposits at move-in and inspections and deposit returns at move-out.

    We all learned that kids who go from “Mom & Dad – to dorm – to house” don’t realize that light bulbs and toilet paper don’t just grow in the cabinet, and someone needs to call the utility company to put the billing in someone’s name, or the water doesn’t run and the lights won’t turn on!

    Over all, if the numbers work (rent vs buy) it can be a terrific experience for both the student and the parents to invest in a college house. After owning our college house for 8 years, (daughter was in it for the first 2, and roommate’s younger siblings for the next 2, then strangers for the next 4 years) we sold it at a substantial profit, paid off her student loans, paid for her wedding, and put a pretty good chunk in the bank!

    I would do it again, if I had another kid starting college now!

  5. @Vicki

    Thank you for that wonderful story. It appears your daughter (the property manager) was both mature and responsible enough to handle homeownership quite well.

    @Louis,

    I totally agree that responsibility is by individual. Some 17 year old kids act with more self-control than some 37 year olds I know. But it just seems to me that there’s nothing inherently difficult about homeownership such that college students MUST be shoehorned into dorm life. If anything, it almost seems to me like having to take care of a major financial asset like a house would help the young person grow in maturity and responsibility.

    -rsh

  6. @Vicki

    Thank you for that wonderful story. It appears your daughter (the property manager) was both mature and responsible enough to handle homeownership quite well.

    @Louis,

    I totally agree that responsibility is by individual. Some 17 year old kids act with more self-control than some 37 year olds I know. But it just seems to me that there’s nothing inherently difficult about homeownership such that college students MUST be shoehorned into dorm life. If anything, it almost seems to me like having to take care of a major financial asset like a house would help the young person grow in maturity and responsibility.

    -rsh

  7. As a relatively recent graduate from college (LUC, class of 2007) I believe I can shed some light on this topic.

    I knew kids that were fortunate enough to have parents in the position to purchase a house/condo for them during their college years; all of them kept the places that their parents had purchased in tip top shape. Some were in one bedrooms living solo, while others had roommates and acted somewhat like a live in super (collecting rent, making sure things work, etc.). Nonetheless I believe all these kids acted more responsibly acting as home owners then they would have if they had lived in a dorm… The fact of the matter is even the nicest dorm, is still not going to be as perceived to be as nice as your place where you have the power to really personal the space. While it is self evident that the university owns the dorms, their really isn’t a face of disappointment when you break a wall in a dorm or flood a bathroom. However lets apply the same destruction to condo that your parents have purchased; there is a clearly a face, voice, and sometimes even a foot that will express disappointment with that broken wall… This motivation links directly to the classic parenting line of “I am not angry, I am disappointed…”

    Let just be honest, for some reason when you are in college the larger the group the better horrible ideas sound… You are more likely going to be able to rally 40 people on your floor in a dorm to set up a “slip-n-slide” in the hallway; then you would be if you were in a living situation with just 4 people, and those 4 people were like minded best friends…

    I do think that one year in student housing should be mandatory it will truly make kids appreciate how good they have it once they are in a place living as/like a home owner…

  8. As a relatively recent graduate from college (LUC, class of 2007) I believe I can shed some light on this topic.

    I knew kids that were fortunate enough to have parents in the position to purchase a house/condo for them during their college years; all of them kept the places that their parents had purchased in tip top shape. Some were in one bedrooms living solo, while others had roommates and acted somewhat like a live in super (collecting rent, making sure things work, etc.). Nonetheless I believe all these kids acted more responsibly acting as home owners then they would have if they had lived in a dorm… The fact of the matter is even the nicest dorm, is still not going to be as perceived to be as nice as your place where you have the power to really personal the space. While it is self evident that the university owns the dorms, their really isn’t a face of disappointment when you break a wall in a dorm or flood a bathroom. However lets apply the same destruction to condo that your parents have purchased; there is a clearly a face, voice, and sometimes even a foot that will express disappointment with that broken wall… This motivation links directly to the classic parenting line of “I am not angry, I am disappointed…”

    Let just be honest, for some reason when you are in college the larger the group the better horrible ideas sound… You are more likely going to be able to rally 40 people on your floor in a dorm to set up a “slip-n-slide” in the hallway; then you would be if you were in a living situation with just 4 people, and those 4 people were like minded best friends…

    I do think that one year in student housing should be mandatory it will truly make kids appreciate how good they have it once they are in a place living as/like a home owner…

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