SCAD indicates room and board is a $14,550 annual expense.  Over four years that is $58,200.   Georgia Southern (Armstrong) lists private single housing at $3,902 per semester; $46,824 over four years.

Consider purchasing a home to house your student as a profitable investment and an increase of your net asset value.

(1)  As an example, a 4-bedroom 2.5 bath residential home in a good area sells for $200k.  My rule of thumb is $6 per thousand to estimate the monthly PITI.  $1200 a month for this case.  Your real estate agent will develop exact numbers for you for a particular property. 

Put your student in the master bedroom and fill the other three bedrooms with renter students (roommates).  At $400 per month plus ¼ utility expenses each, the roommate students will cover the investment.   

Use a property manager to write and enforce the roommate leases and look after the property and provide for any maintenance.  A good property manager will also require a co-signer for the typical student renter. 

$1200/mo roommate rent plus $521 utilities = $1721 income.

$1721 – $181 – $1200 = $340 positive cash flow. 

Cash flow rather than a boarding expense for your student is interesting, isn’t it.  At the end of four years you will still own an appreciating asset.  Continue to rent to students or convert to a long-term renter and enjoy the benefits of cash flow, tax deductions and property appreciation. 

Or sell and take the profit.  At 2% annual appreciation, the property value would increase about $17,000.  At 3%, appreciation is more like $25,000.  Also note you were cash flowing for 4 years, and you were also not paying boarding fees as an expense.

The residential property will probably require use of a car.  A used Toyota Camry is inexpensive all around, cheap to insure, relatively safe, extremely reliable and they are easy to find.  Other room mate students with similar class hours can carpool and pitch in some car expense money.

(2)   A downtown example.  SCAD students find downtown properties desirable.  Larger unit that sells for $400k.  At $6 per thousand, the estimated PITI is $2400. 

It is common to convert a living room or parlor and/or dining room to a student bedroom with downtown properties.   A realtor (Kathy) can help identify the properties suitable for adding bedrooms to other rooms (which means doors for privacy).  Doors can be added.  Set it up for 4 renters (or more) plus your student.

At $500 per month plus 1/5 utility expenses for roommates, the approximate costs are:

$2400 piti

$250 electric

$75 water

$200 management fee

$150 internet

$675 utilities (1/5 = $135/mo)

$2000/mo roommate rent plus $540 utilities = $2540 income.

$2540 – $135 – $2400 = $144 positive cash flow. 

The property is expected to appreciate, perhaps $40,000 over 4 years.  The investment property will also lower your tax burden.  Get the view of your CPA.  Possibly Add a 6^th bedroom by enclosing another space and cash flow goes up.

The renter roommate students benefit by saving about $27,000 over the 4 years compared to the SCAD room and board.  As the owner of the investment, you benefit from cash flow and ownership of an appreciating asset that increases your net worth.

(3)   Listed property 11/20/2020: 621 Maupas Ave, Savannah, GA, 31401.  Listed for $399,000.  3 bedrooms and 2.5 baths.  Reviewing the photos indicates that 4 bedrooms are readily possible (maybe 5). 

With 20% down and a 30yr mortgage, PITI is shown to be $1,485 on realtor.com.

$250 electric

$75 water

$100 lawn

$150 management fee

$150 internet

$725 utilities (1/4 = $181/mo)

$1500/mo roommate rent plus $544 utilities = $2044 income.

$2044 – $181 – $1485 = $378 positive cash flow.

(4)   Listed property 11/20/2020: 12511 King Palm Dr, Savannah, GA, 31419.  Listed for $229,900.  4 bedrooms and 3 baths. 

PITI is shown to be $983.

$250 electric

$75 water

$100 lawn

$120 management fee

$150 internet

$695 utilities (1/4 = $174/mo)

$1200/mo roommate rent plus $521 utilities = $1721 income.

$1721 – $174 – $983 = $564 positive cash flow.

Talk with Kathy Fairchild about purchasing an investment property. 

[email protected]

Talk with Jessica Mays about management for your property.

[email protected]

Office 912-925-9925