23 Sep Dorms or buying a home for your college kid?

Q. I’m thinking about buying a small house in the town where my kid goes to college. We could save on room and board, but I know there are lots of negatives. Can you lay it all out for me?

A. There’s a lot you need to consider before you buy a property.

First, make sure you know who will be living in the home, said Dean Shah, a certified financial planner with Stonegate Wealth Management in Oakland.

“Will your child reside there alone or with roommates?” Shah said. “If it’s the latter, you can charge rent, which may subsidize expenses.”

That’s a positive, but on the negative, would your child and the potential roommates be safe and responsible? That’s a question you need to answer.

The cost is a big factor, too.

“You may be saving on room and board, which can be expensive depending on the institution,” Shah said.

But when you include the other costs, you have to decide if the cost is really a savings for you. Shah said you have to consider legal fees and closing costs, homeowners insurance, property taxes and maintenance. You also need to worry about the cost of utilities and cable television, and even the grocery costs because your student won’t have a meal plan.

The way you pay for the home is also important, Shah said, and using your retirement plan or getting a mortgage can be negatives.

“Interest is deductible, but it’s still an unnecessary expense,” Shah said.

And then you need to decide what you plan to do with the home after your child graduates.

You could give it to your child if he or she is strongly inclined to stay in the area, or you could continue to rent it to other students in the area. You’ll then have to worry about being a landlord with all the costs that come with it.

If you instead decide to sell, there’s no guarantee what the housing market will be like in four years. If you don’t have to sell at a loss and instead there’s a gain, you have to consider the tax implications. Plus, you’ll have more expenses to sell the home.

It’s a big decision — good luck!

Email your questions to .

This story was first posted in September 2015.