Why Owning your Kids Student Rental is Great Opportunity

Andra Arnold • September 20, 2024

Watching your child head off to university is a huge moment for any family. Whether they’ve been accepted into their dream school or a fantastic local option, it’s a major achievement—and a big transition for everyone involved.

As exciting as this new chapter is, it also comes with its own set of challenges, especially when it comes to finding a place for your child to live. With housing in Guelph—and many other university towns—in such high demand, securing accommodations can feel overwhelming.

That’s why more parents are considering purchasing a student rental property. Not only does this provide a stable home for their child, but it also offers long-term financial benefits. Here’s why investing in a student rental property might be the best decision for you and your family.

Security and Peace of Mind

Owning a home in Guelph—or any university town—offers a level of security that renting simply can’t. When you buy, there’s no risk of a landlord selling the property or changing rental terms, leaving your child scrambling to find a new place to live.

Owning the home means that no matter what happens in the market, your child will always have a safe, secure place to return to each semester. There's no worrying about lease terms, subletting challenges, or losing the unit at the end of the school year.

Broader Investment Opportunities

While Guelph is one of the best places to invest, university towns across Canada are attractive real estate markets. With a constant influx of students year after year, the demand for housing is steady, making university towns great locations for long-term investments. Whether it’s Waterloo, Kingston, or London, owning property near a university guarantees a strong rental pool and the potential for consistent appreciation in property value.

Decreased Cost of Living and a Solid Investment

While the cost of housing has been on the rise, owning a property can help you offset this by building equity instead of paying rent. Rent in university towns is often one of the largest expenses students face—sometimes even surpassing tuition. But unlike rent, which disappears each month, your mortgage payments go toward something that grows in value over time.

Additionally, when landlords charge rent by the room, they can significantly exceed the average rent for an entire unit. As an owner, you can take advantage of this structure to help cover mortgage payments, maintenance, and utilities, potentially generating a positive cash flow while your child lives rent-free.

Even if the rents don’t result in a positive cash flow, the property is still likely to make a significant return on your initial down payment investment. Real estate in university towns like Guelph typically appreciates over time, meaning that even if monthly expenses aren’t fully covered, the overall value of the property could increase significantly by the time your child graduates. This makes it a solid investment for the long term, offering both huge potential savings and growth in equity.

Financial Benefits and Secondary Residence Perks

Purchasing a student rental as a secondary residence comes with unique benefits when it comes to financing. Secondary residences often qualify for different mortgage terms than investment properties, potentially offering more favorable rates or requirements. This can make buying a student rental even more financially attractive.
On top of that, with Guelph’s housing market continuing to rise, you stand to gain significant equity by the time your child graduates. And since the property can be rented out to other students, it can help reduce the cost of university and even generate additional income. Whether you sell after graduation or hold on to the property, it can be a valuable asset that supports your family’s financial goals for years to come.

Real-World Learning Experience

There’s no better way to prepare your child for adulthood than by introducing them to the responsibilities of homeownership. From managing tenants to handling repairs and budgeting, the experience of maintaining a property will teach them invaluable life skills that no classroom could offer.
And if your name is on the title, you’ll share in the equity gains, while avoiding the need for a property manager—making it a win-win for both you and your child.

A Great Investment Opportunity for All

Even if you don’t have a child heading off to university, student rentals can be a fantastic addition to your investment portfolio or even a smart first-time investment. With strong demand for housing in university towns, these properties can offer steady rental income and long-term growth potential. Investing in a student rental gives you the flexibility to either continue renting to students or eventually convert the property into something else down the road, making it a versatile option for both experienced and first-time investors.

Let’s Talk About Your Options

If you or someone you know has a young adult who is off to university or is entering their second year, now is a great time to chat about the possibilities. Anyone on our team at Andra Arnold and Associates would be happy to discuss the options and opportunities available to you. Feel free to reach out at any time!