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Why I wish I would have bought a home in College

Eight years ago I left my parents house to go on an adventure three hours south; college. Florida Gulf Coast University to be exact. It was a great time, met a lot of amazing people that are still in my life, learned a lot and my life changed for the better because of the experiences throughout college. One thing I do however regret looking back at it, I did not buy a home my first or second year I was there.

Most people don’t even think about that, college is a big enough step as-is without having home ownership dangling over their head. But what most people also don’t understand is the added benefits home ownership can bring while in college – both convenience and financially.
In the past eight years I have no lived in one place for more than a year. I did two years in the dorm (had to move out each summer), one year in a non-affiliated university student apartment, rented a home until the owner decided to sell it, another home before our third roommate left and went down to a two bedroom condo. When people say packing is not fun, they’re right. It’s horrible. When you have to do it each year, it becomes even worst; some of my stuff never even gets unpacked as I’m just so over it. I’m ready to settle down, I’ve been ready to settle down and stay in one place for more than a year. It’s just a convenience factor, but if you don’t have to go through all that, why would you want to?

The financial part is where things start to get good and I think where a lot of people reading this article will have a lightbulb turn on. I’ll use my area and the past eight years of my situation (which is pretty common for most students) as an example. In the past eight years, I’ve had three roommates until the past two where it went down to one roommate. Home prices where most students rent (also where most first-time home buyers buy, along with investors that rent these homes to students) go for roughly $200,000-$250,000, condos will be less, but they also involve HOA fees.

So let’s go with a $200,000 3 bed, 2 bath home. First time home buyers only have to put down 3% for the down payment, so that would be $6,000. The 30-year mortgage would be roughly $917 at an interest rate of 3.92%. Taxes run roughly $1,100 per year in this area. Rent for this same home would be roughly $1500-1800 depending on how nice it is and the square footage. We were paying $1600 month for the home we were in. $1600/3 people is $533 each. Do you see where I’m going with this?

Now if you were to buy that home and charge your roommates $533 each, it would total $1,066 – already over the mortgage payment by $149 – and you get to live in the home for free essentially. Now the smart thing would be to put what you would be paying ($533) in the mortgage as well to help pay it off quicker.
Let’s fast forward six years where one of the roommates decides to leave and you’re down to two. You can either try to find another one or just live with the other roommate you still have. But let’s run some numbers after these six years. If you paid the $1066 you charged your roommates and also $533 for yourself toward the mortgage, after six years, your mortgage would have shortened by 15 years and 3 months. The real kicker? You would have saved $74,771 in interest payments over the period of the loan!

The next two years if it’s just you and one roommate, the mortgage would be about the same if you keep putting $533 in it and you charge your roommate the same. But you’re still paying half the mortgage payment and building equity in the house. If at for some reason you wish to sell the house now, chances are pretty good that you will actually have a positive balance and make money selling it.

I wish I would have went this route when I first moved to Fort Myers, Fl for school, but it never even crossed my mind. Hopefully some incoming students or even Freshman and Sophomores that are trying to figure out where to live will consider this great financial move that have in front of them.

If you’re coming to FGCU or know someone who is, feel free to reach out to me as a Fort Myers Realtor and also Bonita Springs Real Estate is another option for students. 239-494-3433

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2 Comments

  1. Lorvena says:

    I see where you’re going with this and it sounds like a splendid idea but my only concern would be how I would manage to get that down payment amount for a home. Would you recommend still renting the home if you graduated and went off to another state? Would you stop by every so often to make sure the residents haven’t flipped the house upside down? Anyways, great article. 

    • MattLarmore says:

      Hi Lorvena,
      Great questions! There are a lot of great programs that require little down with the most popular being the FHA loan, requiring just 3% down. If you served in the Armed Forces, you can get a loan with no down payment. Other programs are also available, I’d be happy to discuss what ones you may qualify for.
      As far as keeping the house as a rental if you move; that would depend on the situation. If you want to have a stand-alone investment property, it would be ideal to keep it. There are rental management companies that will take care of the property (find you tenants, ensure they pay, make sure the property is being taken care of by the tenants, ect) for a fee. If you’re out of town, I would recommend that unless you know someone in the area that can drive by every once in a while to make sure everything is good.

      If you would like more information, I’d be happy to discuss it in more detail: 239-494-3433 Thanks, Matt Larmore

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