Filiprish
09-14-2004, 01:46 PM
What a great idea for college students w/ parents who can afford the investment.
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http://graphics7.nytimes.com/images/misc/logoprinter.gif
September 12, 2004
NATIONAL PERSPECTIVES
In California, Students Find Housing Lucrative
By NICHOLAS GRUDIN
http://graphics7.nytimes.com/images/dropcap/l.gifOS ANGELES
FOR about a year or so, Efren Ramirez, 20, a pre-med student at Santa Monica College, had been paying $900 a month for a small studio apartment and shared bathroom. Knowing that he had many years of school ahead, Mr. Ramirez decided that spending money on rent didn't make sense, and he started looking for an alternative.
Last summer, with financial assistance from his parents and his fianc้e at the time, Mr. Ramirez bought a condo a mile from the U.C.L.A. campus, where he will enroll this winter. Today, because of the hot Southern California market, his modest one-bedroom unit, for which he paid $240,000, already has appreciated $110,000, and when he finds a roommate, his $1,700 mortgage payments will be halved.
"A couple of years from now when I have to afford medical school, this will make it a lot easier," Mr. Ramirez said, strolling across the parquet flooring he recently installed in his living room.
Real estate agents say that parent-student buyers make up a notable contingent of the area's business. "I get them all the time; smart people do that," said Coco Clayman-Cook, the assistant manager at Prudential California Realty's Beverly Hills office, who found Mr. Ramirez his condo.
Here, and in other cities throughout the country where real estate has been a good investment, the practice seems to be growing more popular as more people decide that its economics are compelling.
In Westwood, the U.C.L.A. college town not far from Bel Air, Brentwood and Beverly Hills, rents for one-bedroom apartments are now about $1,500 a month. And while university administrators hope to guarantee campus housing for all undergraduates who want it, a plan to add thousands of rooms by the end of the decade could still leave about 23,000 students, graduate and undergraduate, looking for housing in Westwood and its pricey surroundings, according to Michael Foraker, director of housing at U.C.L.A. These factors, combined with California's rapidly appreciating housing market, have led real estate-savvy students and their parents to change their perspective on student housing. Instead of viewing it as a draining but necessary expense, they consider it a lucrative investment opportunity.
"It makes so much sense; you don't pay any rent and you make money on your investment you might be able to pay to put your kids through school," said Jack Kyser, chief economist for the Los Angeles County Economic Development Corporation, who has witnessed the same phenomenon in downtown Los Angeles near the University of Southern California.
Likewise, a few hundred miles north, around the University of California at Berkeley, where housing prices have also skyrocketed, many students are now living in what are essentially investment properties, according to William Ktsanes, director of research and analysis for RealFacts, an apartment market research firm. "Families looking at paying $1,500 a month for their child's apartment start considering buying a home and feel like it's a secure investment partially because it is in a college town and there will always be students that need housing there," he said.
With today's low interest rates, the math works out well, provided that parents can afford the down payment on a condo, which for a one- or two-bedroom unit around U.C.L.A. would cost $350,000 to $500,000. Other considerations include homeowner's dues, property taxes and maintenance, but those expenses can be offset if the student is willing to live with a roommate or two.
Although Westwood real estate's recent appreciation of about 15 percent a year makes the decision to buy look particularly easy in retrospect, the market needs only moderate growth for the investment to pay off, according to Suzanne Frank, owner of Abbot Kinney Real Estate in Venice.
Parents "can go get a place and put in a down payment and put a few other kids in there and the other students' parents are paying their mortgage," said Ms. Frank, who has sold real estate on the west side of Los Angeles for 20 years. "Not only are they going to get tax benefits, but they get the benefit of having their child living in a nice place their own home with their own kitchen and they're making money."
Emi Yoshida, 22, who graduated from U.C.L.A. in June with a double major in business economics and sociology, spent her junior and senior years living with three friends in a two-bedroom condo that her father, Michael Yoshida, bought in 2002. All of her roommates paid below-market rent and lived two to a room, just as they would have in dorms, but in this case their rent offset Mr. Yoshida's monthly costs.
"I was clearly comparing the numbers between paying rent versus ownership, with the potential for a selling price that would make it a smart move at the end of a couple of years," said Mr. Yoshida, a San Francisco architect. "I just went through the math on my own, and given the trend of how real estate is going down there, it made sense to do this."
For Ms. Yoshida, who is planning to move to New York City and seek work in public health, the arrangement was not only a good investment her condo has appreciated more than 30 percent since 2002 but also her first experience as a homeowner, acting as the de facto landlord, often dealing with renters who were people she knew. "There's a business relationship that develops that's different from a friendship," she said. "There were ups and downs to having it, but the good definitely outweighs the bad."
Naysayers are quick to point out that students like Ms. Yoshida are missing out on an important aspect of college campus life. But the young homeowners are gaining a different type of education, according to Richard Pon, 24, who is working toward a doctorate in electrical engineering at U.C.L.A. In May, Mr. Pon bought a condo eight miles away, in Culver City. His one-bedroom condo looks surprisingly similar to a dormitory room, complete with dead potted plants flanking a barbecue grill on his patio and a TV blocking the fireplace.
Mr. Pon is already beginning to understand the responsibilities, and rewards, of owning a home.
"If something breaks, you can't just write a letter to the management," he said. "When I clean something up, I'm cleaning it up for myself. It's like, would you wash a rental car?"
So far, it seems worth it to him. "It's a lot more work," he said, "but there's a lot more personal value, too it's exciting."
Copyright 2004 The New York Times Company
-------------------------------------------
http://graphics7.nytimes.com/images/misc/logoprinter.gif
September 12, 2004
NATIONAL PERSPECTIVES
In California, Students Find Housing Lucrative
By NICHOLAS GRUDIN
http://graphics7.nytimes.com/images/dropcap/l.gifOS ANGELES
FOR about a year or so, Efren Ramirez, 20, a pre-med student at Santa Monica College, had been paying $900 a month for a small studio apartment and shared bathroom. Knowing that he had many years of school ahead, Mr. Ramirez decided that spending money on rent didn't make sense, and he started looking for an alternative.
Last summer, with financial assistance from his parents and his fianc้e at the time, Mr. Ramirez bought a condo a mile from the U.C.L.A. campus, where he will enroll this winter. Today, because of the hot Southern California market, his modest one-bedroom unit, for which he paid $240,000, already has appreciated $110,000, and when he finds a roommate, his $1,700 mortgage payments will be halved.
"A couple of years from now when I have to afford medical school, this will make it a lot easier," Mr. Ramirez said, strolling across the parquet flooring he recently installed in his living room.
Real estate agents say that parent-student buyers make up a notable contingent of the area's business. "I get them all the time; smart people do that," said Coco Clayman-Cook, the assistant manager at Prudential California Realty's Beverly Hills office, who found Mr. Ramirez his condo.
Here, and in other cities throughout the country where real estate has been a good investment, the practice seems to be growing more popular as more people decide that its economics are compelling.
In Westwood, the U.C.L.A. college town not far from Bel Air, Brentwood and Beverly Hills, rents for one-bedroom apartments are now about $1,500 a month. And while university administrators hope to guarantee campus housing for all undergraduates who want it, a plan to add thousands of rooms by the end of the decade could still leave about 23,000 students, graduate and undergraduate, looking for housing in Westwood and its pricey surroundings, according to Michael Foraker, director of housing at U.C.L.A. These factors, combined with California's rapidly appreciating housing market, have led real estate-savvy students and their parents to change their perspective on student housing. Instead of viewing it as a draining but necessary expense, they consider it a lucrative investment opportunity.
"It makes so much sense; you don't pay any rent and you make money on your investment you might be able to pay to put your kids through school," said Jack Kyser, chief economist for the Los Angeles County Economic Development Corporation, who has witnessed the same phenomenon in downtown Los Angeles near the University of Southern California.
Likewise, a few hundred miles north, around the University of California at Berkeley, where housing prices have also skyrocketed, many students are now living in what are essentially investment properties, according to William Ktsanes, director of research and analysis for RealFacts, an apartment market research firm. "Families looking at paying $1,500 a month for their child's apartment start considering buying a home and feel like it's a secure investment partially because it is in a college town and there will always be students that need housing there," he said.
With today's low interest rates, the math works out well, provided that parents can afford the down payment on a condo, which for a one- or two-bedroom unit around U.C.L.A. would cost $350,000 to $500,000. Other considerations include homeowner's dues, property taxes and maintenance, but those expenses can be offset if the student is willing to live with a roommate or two.
Although Westwood real estate's recent appreciation of about 15 percent a year makes the decision to buy look particularly easy in retrospect, the market needs only moderate growth for the investment to pay off, according to Suzanne Frank, owner of Abbot Kinney Real Estate in Venice.
Parents "can go get a place and put in a down payment and put a few other kids in there and the other students' parents are paying their mortgage," said Ms. Frank, who has sold real estate on the west side of Los Angeles for 20 years. "Not only are they going to get tax benefits, but they get the benefit of having their child living in a nice place their own home with their own kitchen and they're making money."
Emi Yoshida, 22, who graduated from U.C.L.A. in June with a double major in business economics and sociology, spent her junior and senior years living with three friends in a two-bedroom condo that her father, Michael Yoshida, bought in 2002. All of her roommates paid below-market rent and lived two to a room, just as they would have in dorms, but in this case their rent offset Mr. Yoshida's monthly costs.
"I was clearly comparing the numbers between paying rent versus ownership, with the potential for a selling price that would make it a smart move at the end of a couple of years," said Mr. Yoshida, a San Francisco architect. "I just went through the math on my own, and given the trend of how real estate is going down there, it made sense to do this."
For Ms. Yoshida, who is planning to move to New York City and seek work in public health, the arrangement was not only a good investment her condo has appreciated more than 30 percent since 2002 but also her first experience as a homeowner, acting as the de facto landlord, often dealing with renters who were people she knew. "There's a business relationship that develops that's different from a friendship," she said. "There were ups and downs to having it, but the good definitely outweighs the bad."
Naysayers are quick to point out that students like Ms. Yoshida are missing out on an important aspect of college campus life. But the young homeowners are gaining a different type of education, according to Richard Pon, 24, who is working toward a doctorate in electrical engineering at U.C.L.A. In May, Mr. Pon bought a condo eight miles away, in Culver City. His one-bedroom condo looks surprisingly similar to a dormitory room, complete with dead potted plants flanking a barbecue grill on his patio and a TV blocking the fireplace.
Mr. Pon is already beginning to understand the responsibilities, and rewards, of owning a home.
"If something breaks, you can't just write a letter to the management," he said. "When I clean something up, I'm cleaning it up for myself. It's like, would you wash a rental car?"
So far, it seems worth it to him. "It's a lot more work," he said, "but there's a lot more personal value, too it's exciting."
Copyright 2004 The New York Times Company