A Strategy for Investing in Davis Real Estate
Congratulations, your daughter or son have been accepted to UC Davis!
If you are looking for an investment in Davis Real Estate, let us suggest a strategy that many parents use to provide a great housing option while lowering the overall cost of sending a child to college:
- Freshman year, your student lives in the dorms. They meet new people and get to know the area.
- During the summer between Freshman and Sophomore year, you purchase a three bedroom, 2 bath home, half-plex or condo in Davis.
- In the fall of sophomore year the student moves into the home, occupying the Master bedroom with private bath. The student invites two friends to share the home, each getting their own room and sharing a bathroom.
The rent paid by the two students in the guest rooms will offset some of the mortgage and maintenance expenses.
Your child acts as property manager seeing that the property is kept in good condition and collects the rent.
You get to take depreciation against your taxes on the home. Expenses are offsets against the rental income. You might even pay a small fee to your student to act as property manager. This payment is also a deduction against rental income. *
- During the 3 remaining years of college, the home may appreciate in value. The rent being paid by the guest students helps pay the mortgage and build equity in the home. Best of all, your student has peace of mind. They always know where they will be living each year. No frantic search for an apartment before schools starts.
- After your student graduates, you can sell the home or continue to rent it out.
- If after graduation, your child chooses to make Davis their home (many do!), then they already have a place to live, and they can arrange to lease or purchase the property from you.
This is a basic strategy that we have seen used successfully many times to help offset some of the expenses of putting a child thru college.
*Of course this is just an outline. We recommend that you consult a professional about the facts on depreciation and deduction of expenses on a rental property in California.