No bubble here, nothing to see, just move along, folks....
If I ever buy a house for my kid, just shoot me, OK?<NG> And don't kid yerself, this is all being done for whackass speculative purposes, Mom expects to make a killing. Little does she know......to quote Monty Python, "NO ONE EXPECTS....the SPANISH INQUISITION". But that's what this experiment'll feel like when she's done.
azcentral.com
More college students buying homes
Condo living a payoff for families
Jonathan J. Higuera
The Arizona Republic
Dec. 21, 2005 12:00 AM
Before becoming part owner of the Tempe condominium she lives in, Kristin Wojtan, 19, never gave much thought to lights left on around the house or the temperature setting for the heater.
That changed in September, when she moved into a condo she and her mother teamed up to buy.
"Now it's like, 'Who left this light on?' or, 'We don't need the heater on, just use more blankets,' " she says.
Wojtan is part of a growing number of college students taking the plunge into home ownership, or at least becoming the primary resident and caretaker for real estate investments by their parents. With interest rates at historic lows and creative financing packages making it easier to swing a down payment and monthly mortgage payment, more parents and students are deciding it's better to buy rather than pay rent to someone else.
Before she's even out of her teens, Wojtan already is taking on the responsibilities of home ownership.
As a sophomore at Mesa Community College, Wojtan and her mother, Donna Larson, bought a condo at the Vale, a 40-unit condo complex on University, just west of Arizona State University, where she is taking one class and will eventually transfer to full-time.
The pluses for both parent and student can be enticing: writing off mortgage interest on taxes; making an investment in real estate, which hopefully will appreciate in value; giving a son or daughter a sense of real-world responsibilities; and allowing them to gain some credit history. Also, there is the parental desire to give a son or daughter a stable, comfortable place to live during their college years.
Brad Schmidt, district director of Zip Realty, says the favorable lending environment is one reason parents and students are intent on exploring ownership. In the past year, there's been a noticeable uptick in such deals by his brokerage firm in the Tempe area, he said.
"Anytime you have an opportunity to have a mortgage payment equal to or around a rental payment, it's attractive," Schmidt said.
Before deciding to own, however, parents and students should consider possible downsides. The biggest is thrusting ownership responsibilities on a son or daughter who is not ready for it.
Another common mistake is overestimating a property's potential for appreciation and underestimating the additional costs of home ownership, including maintenance, homeowner association fees, insurance and taxes.
Still, at ASU's off-campus living office, inquiries into real estate opportunities have gone from about three or four a year to two or three a month.
Many of the buyers are students and parents from out of state, Schmidt and others said.
"It's typically purchased in the parent's name, but all kinds of things can happen. One benefit is when the kids start to embrace the concept of home ownership and take pride in ownership," he said.
Parent Gayle Johnson already is seeing that pride in her son, 20-year-old Scott Johnson, who is majoring in architecture at ASU. The Johnsons bought a one-bedroom condo about 10 minutes from the campus over the summer. Scott Johnson now lives there by himself while taking classes. Although he's not paying rent, Johnson plans to do so once his studies allow him more time to work.
"I would have had to pay for his housing, no matter what; except now I own it," said Gayle Johnson of Minneapolis.
Her son has quickly learned about all the bills that he never paid much attention to before, Johnson said. For example, he was surprised to learn that you had to pay for water.
The younger Johnson said he doesn't feel like a homeowner because he has not paid for anything out of his own pocket, but he's well aware of the responsibility his parents have placed in him.
"I want to take good care of it for them," he said "But they will be the ones reselling it. Not me."
Wojtan and Larson said they ended up paying more than they envisioned but felt the returns would be better over the long-term. They paid in the high $200,000s for the condo, using an interest-only loan.
"You hear a lot about why you shouldn't do an interest-only loan," said Larson, who is in the mortgage business. "But it can be good for some people in certain situations, especially if you only plan to be in a place for a few years."
Wojtan is not a co-signer on the loan because her lack of credit history would have increased the interest rate. But she did put in $6,000 into the down payment and closing costs. She and her mother agreed that when the condo is sold, she would receive a percentage of the equity equal to the percentage of her investment. In fact, the condo's value has already risen from the purchase price, they said.
"We both felt we didn't want to give our money away paying rent for an apartment," said Wojtan, who took in a roommate and now splits the $1,200 mortgage payment. "In a few years, I'd like to buy my own property."
Wojtan says she entered into the arrangement with her mother with eyes wide open but acknowledges it's not for every college student.
"I look at some of my friends and they are complete party animals," she said. "It took a conscious effort to settle down and say, 'I'm going to get this done.' It's really demanding, but at the same time, I feel privileged to experience it." |
