Is Buying a Condo Unit for my Child a Good Investment?

Saskatoon is a university town and people come from all over the world to study here. There are many families from smaller towns or farms in Saskatchewan that invest in a Saskatoon condo unit so their student children have a place to live while they go to college. Buying a condo unit is a very positive situation for people who want to earn some equity rather than just paying money to a rental landlord. Depending on the area and the ages of the people in the family, they may even choose to hold the condo unit for retirement or later use in life. Parent-buyers may also decide to hold on to the condo unit after their children graduate once they realize how attractive the cash flow is. A condo unit is a great long-term investment.

Heck, there may be a reason not to link the investment to a child at all. It just needs to be a good investment — rents need to be rising in the area you choose, and there should be an opportunity for appreciation over time. When the investment goes up in value, you will make money. Here are a few perks and other things to know when deciding if this is the right investment for you.

  • The rental income you charge can pay a lot of your costs. Just remember you have to declare that income on your tax return.
  • As a landlord, you can also claim many of your expenses, including mortgage interest. Assess your costs carefully before you buy. They will vary with the local real estate market, mortgage rates and other factors.
  • Plan for some vacancies. Your child (or their roommate) may not stay in the condo over the summer break. Are you going to ask them to pay rent if they are living somewhere else for a few months?
  • Remember that you will own a greater share of the equity as you pay off the mortgage. And, the value of the condo may rise over time. This can offset your costs.

Regardless of how one chooses to invest, with growing demand for housing outstripping its supply, the investment returns are expected to continue far longer than the four-to-five years a child spends in college.

The most important first step is to speak with your financial advisor if your child is going to university or college and you are considering buying a condo unit that they can live in, and perhaps share with a fellow student who pays you rent. It can be a good alternative to paying thousands of dollars toward residence fees or rent. And it’s a real estate investment for you with at least one guaranteed tenant — your child.

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