Why Invest in a Tower Plaza Condo?

Buy v. Rent

Sometimes it can make good financial sense to buy, rather than rent, your child's student housing. Consider, for example, the recent experience of parents who decided to purchase a Tower Plaza condo for their daughter’s student housing rather than rent an off-campus apartment.

The parents purchased the condo here before the beginning of their daughter's junior year at the University of Michigan. Over the course of the next couple of years, their daughter had a roommate whose monthly rent payments helped with meeting the costs of Tower Plaza ownership.

Upon their daughter’s graduation, the parents put the condo up for sale. Although the overall real estate market had declined considerably by that time – due to the struggling national and regional economies – the market for student housing in Ann Arbor had remained relatively strong throughout those years, as it usually does. The parents sold the condo in the fall following their daughter's graduation for not much less than they originally paid.  After accounting for the costs of selling, the parents were able to minimize their net loss to to a manageable amount, which they then deducted from their income taxes for the year.

Please keep in mind the economic context of recent years. In a better time, with a healthier real estate market, the parents’ net loss could easily have been a substantial net gain. The example above can thus be seen to represent what may be close to a worst-case investment scenario.

Of course, this is only one case, and it may not match closely to your own situation. We encourage you to consult with your accountant or other financial advisers to help you make the "buy v. rent" decision. We can also help you plan your student housing stategy, if you wish.